Jet Airways: Defensive stance

ANALYSTS' CORNER

SSKI Securities maintains its underperformer call on Jet Airways. It is based on the view that the airline, in order to protect its market share, would be forced into a defensive mode from a position of strength.

For instance, to capture a pie of the fast growing, price sensitive leisure travel market, the company is offering more seats at discounted rates and lower prices.

In line with its peers, the company has scrapped the need to book discounted tickets 15 to 30 days in advance. The report states that company has yielded to the pricing pressure faced by the domestic carrier industry.

Even as on the Mumbai-Delhi route, which continues to be Jet's forte, the new fare is lower than the earlier one, by just five per cent, on the Mumbai-Bangalore route, facing low-cost competition, fare is lower by 25 per cent.

Jet Airways, which had so far operated in a duopolistic environment, is being forced into a defensive mode by low cost competition.

The intensity of competition is going to increase as new routes are introduced and new low-cost carriers begin operations, as per the report. At Rs 1,205, the stock trades at a multiple of 17x FYO6E earnings and a EV/EDBITDA of 7x.

Grasim Industries: Future perfect

Enam Securities rates Grasim Industries as outperformer relative to the sector. The report states that the June quarter results showed weak performance in the VSF and sponge iron businesses, while there has been a recovery in cement division.

Going forward, the VSF business is expected to improve over the next two quarters. The medium-term outlook for the steel sector remains favourable and sponge iron price is likely to recover. At Rs 1,188, the report considers Grasim to be undervalued at 10.2x FY06E.

Centurion Bank: Retail focus

Enam Securities rates Centurion Bank as neutral relative to the sector. It states that the bank is emerging as one of the fastest growing retail focussed banks in India. IIt is already among the top three players in two-wheeler financing and among the top 10 in commercial vehicle and construction equipment financing.

Its net NPAs have fallen to 2.4 per cent in June quarter from 4.4 per cent a year ago. The report adds that the recently announced merger with Bank of Punjab, should allow the bank greater access to low cost deposits, enhance its retail franchise, provide additional infrastructure and provide the bank with the scale to grow even faster.