Analysts Picks

Bharti Airtel
cmp: Rs 650.15
target price: Rs 843

HSBC Global Research has assigned an ���overweight��� rating to the stock saying the company���s strong balance sheet and infra-sharing models will allow it to consolidate its revenue market share leadership further. ���We value the core business at 12.5 times FY10 (estimated) EPS (earnings per share) at Rs 660 per share and tower valuations of Rs 183 per share,��� said HSBC Global Research in a note to its clients.

The research firm is positive on Bharti based on a combination of expected sharp growth in the Indian wireless market, execution of a low-leverage, low-cost business model with a high return on invested capital, and a close alignment of majority and minority shareholder interests. However, it views higher regulatory charges and aggressive international expansion as key downside risks.

Jet Airways
cmp: Rs 181.50
target price: Rs 167

Citi investment research has changed its rating on the stock to ���sell/high risk��� from sell/medium risk with a revised target price of Rs 167 from Rs 440. ���Jet merits a high risk rating, given the competitive scenario in the domestic market, unstability in its international operations and its highly leveraged balance sheet,��� said Citi in a note to its clients.

Citi believes that Jet���s operating cash losses will continue into FY10 and expects the company will need to raise fresh funds to refinance debt repayment (around $280 million over FY09/10E). ���Debt/equity ratios are rendered meaningless given the significantly affected net worth ��� debt-equity is forecast at seven times end FY10E (including asset revaluation reserves),��� said the Citi note. According to Citi, the company will face recurring losses of over Rs 36 billion (earlier Rs 20 billion) over FY09-FY10 due to decelerating passenger traffic and escalating cost pressures (aided by depreciating rupee). It expects the yields to dip by 12% in FY10E as lower fuel prices will be passed on to the customers.

Lanco Infratech
cmp: Rs 145.30
target price: 171

ICICI Securities has maintained its ���buy��� rating on the stock. ���We believe that the expected commissioning of Amarkantak I (300MW) by end-November 2008 would result in reducing execution risk/discount associated with Lanco���s power portfolio,��� said ICICI Securities in a note to its clients. According to ICICI Securities, Lanco���s ongoing litigation with MPSEB to convert Amarkantak I from PPA (power purchase agreement) to merchant is expected to be resolved soon and even 50% conversion will provide upside of Rs 35/share.

���Lanco has emerged as the sole bidder for the 1,320 MW coal-based power plant at Rajpura, Punjab. We expect the tariff of the project to be lucrative, providing healthy upside along with Rs 70 billion EPC potential,��� said the note. The NAV (net asset value) estimates for Lanco stand at Rs 65 billion or Rs 296 per share, the ICICI note said. ���Based on our FY09E, FY10E & FY11E EPS estimates of Rs 16, Rs 19.3 & Rs 26.3, Lanco trades at P/E (price to earning) of 10.7 times, 8.8 times & 6.5 times, respectively,��� the note added.