Stock Views on SUZLON, ANCE INDUSTRIES

J P MORGAN on RELIANCE INDUSTRIES

JP Morgan reiterates `Overweight' rating on Reliance Industries and maintains the target price of 1,240. RIL announced that BP would take a 30% stake in 23 oil and gas fields, including KG-D6, for a total consideration of $7.2 billion. Further payments of up to $1.8 billion would be made if exploratory successes lead to commercial production. After regulatory approval, RIL will receive staggered payments over FY12. RIL and BP will form a 50:50 JV for the sourcing, receiving and marketing of natural gas in India. The deal will boost RIL's already large cash balance (about $7.1 billion). Uncertainty on the use of this cash will remain an overhang on the stock. JP Morgan takes a positive view of the deal, as it validates the value of RIL's E&P portfolio and should be a catalyst for stock performance. The partnership with BP will address concerns on potential production ramp-up/reservoir quality issues.

DEUTSCHE BANK on SUZLON

Deutsche Bank maintains `Hold' rating on Suzlon with a revised target price of 51 per share. Deutsche Bank finds Suzlon's restructuring initiative beginning to show through as gross debt:equity looks to be tapering off in FY12E. Also, thanks to a strong pick-up in wind power demand in India, Suzlon could see a turnaround. A positive operating profit in FY12E and return to black after three years in FY13E are key positives although recent data suggest that an industrial slowdown could create a sector overhang, holding back the stock. Key challenge is conversion of FCCB (debt to equity) at 76.68/share to 97.26/share. Sales volume is a key risk; 10% higher/lower volume could raise/cut FY12E EPS by 110%.