BULL'S EYE

GMR INFRASTRUCTURE 
RESEARCH: NOMURA 
RATING: REDUCE 
CMP: RS 137 
Nomura reiterates the 'Reduce' rating on GMR Infrastructure (GMR) given what they deem to be its expensive valuation and expectation of several disappointments relating to growth opportunities. GMR revealed plans to raise Rs 7,500 crore, although its apparent need is much less. Importantly, it did not share any concrete plans to use the funds thus raised; this is a key concern In an analyst meeting, GMR shared its vision to grow at a rapid pace and with a hurdle rate of 16-18% internal rate of return (IRR) from new projects. It believes dividends from InterGen would be sufficient to pay off acquisition debt. Surprisingly, GMR revealed plans to raise Rs 7,500 crore over FY10-12 even as medium-term requirement for projects under development is only Rs 2,850 crroe as per GMR's estimates. The plan envisages a separate listing of segment holding companies with a view to unlock value. 
BALRAMPUR CHINI 
RESEARCH: CREDIT SUISSE 
RATING: OUTPERFORM 
CMP: RS 120 
Credit Suisse maintains the `Outperform' rating on Balrampur Chini and raises the target price to Rs 150 implying 25% upside to the current market price. Balrampur Chini is one of the most efficient sugar producers in India and therefore is well placed among cane-based manufacturers to benefit from high sugar prices in an environment of low capacity utilisation. PBT per unit of sugar sold is estimated to rise from Rs 3.7/kg in FY09E to Rs7.7/kg in FY10E - to drive higher earnings, even as sales volumes decline from 6.8 lakh in FY09E to 5.5 lakh in FY10E, on account of lower sugar stock compared to the FY09 season. Balrampur's FY10 EPS rises by Rs 1.5 for every rupee rise in non-levy sugar realisation. Credit Suisse values the stock at 12x one-year forward EPS as at the end of March '10, when there's more visibility to the cycle, as the crushing season comes to an end and production figures are finalised. 
PHOENIX MILLS 
RESEARCH: RELIGARE RATING: BUY CMP: RS 168 
Phoenix Mills (PML) is a mid-size real estate developer operating across the retail, hospitality and commercial segments. The company is developing over 435 lakh sq ft (sf) of space and follows a highly capital-intensive business model of asset ownership and lease. It is likely to pursue this assetheavy model for the next couple of years or until its SPV projects become debt-free. Most of its projects are scheduled to become operational by FY11. The company will use the generated rentals to first pay off debt, after which earnings will flow from the SPVs to PML in the form of dividend or sale of assets at higher valuations. Religare expects inflows of Rs 130 crore in FY10 post commencement of the third phase in October '09 (a 400,000 sq ft luxury mall called Palladium), which will take the operational area at High Street Phoenix (HSP) to ~1msf. With a cumulative lease area of 3.1 msf on completion of all the four phases, the company will have an FSI of more than 4x. 
IDEA CELLULAR 
RESEARCH: EDELWEISS RATING: BUY CMP: RS 77 
Edelweiss initiates coverage on Idea Cellular with a 'Buy' recommendation. Idea Cellular, currently operating in 17 of the 22 telecom circles in India, is set to become a pan-India player by end-'09. The company is a unique wireless play-strong incumbent in a tough industry environment with superior spectrum profile, as well as a new entrant capitalising on new growth opportunities. Idea's expansion into new circles is expected to provide a leg up to its subscriber and revenue growth in the near term and offer long-term profit growth opportunities. With new launches to contribute to subscriber/revenue growth, Edelweiss believes old circles' profitability will subsidise new circles' losses up to FY12. The company is in a comfortable funding position (ex-3G) post stake sale to Axiata and Providence Equity. 
HINDUSTAN UNILEVER 
RESEARCH: CITIGROUP RATING: HOLD CMP: RS 256 
Hindustan Unilever (HUVR)'s market share in soaps was ~46% in Q1FY10. Citigroup estimates ~30-35% is concentrated between two brands, Lux & Lifebuoy, whilst the remainder is split between Dove, Pears, Hamam, Rexona, Liril, etc. Over the next two-three years, the growth aspirations of regional players will challenge both meaningful share gains and returns for HUVR's smaller brands. If HUVR embarks on this share protection strategy, it will have to sacrifice margins or make low return investments. Over the next two-three years, these brands should continue to generate relatively lower returns for HUVR. Citigroup believes HUVR will sacrifice market share, rather than invest heavily in low growth categories and lower end brands which will continuously face the threat of consumer downtrade. Citigroup expects HUVR's brand spends to accelerate - especially as it seeks to augment market share in skin and oral care.