Stock Views on OBEROI REALTY, KINGFISHER AIRLINES

JP MORGAN on KINGFISHER AIRLINES

JP Morgan downgrades KAIR to `Underweight' and cuts the September '11 price target to 39 based on 8x September '12 EV/EBITDA, at a premium of 6% to Asian airlines peer group and at a discount of 9% to Chinese airlines. JP Morgan cutting FY11E-FY13E EBITDA estimates by 11% to 22% and reducing EPS estimates by 52%-113%, incorporating higher oil prices and assuming a higher potential dilution to equity on account of debt conversion. KAIR has postponed its $250 million equity raising plan, which will curtail its ability to streamline operations quickly. Key upside risk could come from lower than estimated crude/jet kerosene prices, higher conversion price for potential dilution to equity than expected and potential GDR issuance of $250 million. Key downside risks include slowdown in passenger demand, further rise in crude/jet kerosene prices, inability to successfully restructure debt, delays in plane redeployment and a weaker rupee.

BANK OF AMERICA on OBEROI REALTY

Bank of America initiates coverage on Oberoi Realty with a `Buy' rating and a price target of 290, offering 20% upside potential. Oberoi's topnotch corporate governance and strong NAV visibility make it a benchmark developer for gaining exposure to the highly lucrative Mumbai real estate market. Bank of America expects Oberoi to be least impacted by correction in residential prices in Mumbai due to its balanced mix of assets. Further, tighter liquidity environment will offer Oberoi great opportunity to deploy its 1,600 crore of cash in land assets in Mumbai at reasonable valuations. Oberoi has a balanced mix of assets, which would help it wade through the slowdown relatively unscathed, since the demand pick-up in office/retail space should offset the slowdown in residential market. Every 1% reduction in price impacts its NAV by just 0.5% against 1-3% impact on other developers. Oberoi, with a cash chest of 1,600 crore, is best placed to benefit from the softness in land prices in Mumbai. The expected slowdown in residential segment in Mumbai remains the key headwind for the stock's performance over the next six months. Also the low free float of 12% could lead to volatility in stock performance.