Analysts' corner

GMR Infrastructure & TVS Motor Company

GMR Infrastructure
Reco : Rs 44,
Target: Rs 74

The GMR Group will divest its 50 per cent shareholding in InterGen NV to China's Huaneng Group for an equity value of $1,232 million. The deal is likely to achieve closure by Q1, FY12. This deal re-emphasises the company’s focus on enhancing its cash flow and operating profits. Post IFRS (if GMR had not sold the InterGen stake), due to the leveraged buyout deal structure, the outstanding debt would have increased by $1 billion, impacting the consolidated FY12 estimated debt:equity further by 0.5 to 2.6:1. But due to this deal the consolidated debt:equity is expected to be 1.8:1. Edelweiss had valued the InterGen stake at Rs 3.4 per share and this deal is marginally lower than the same. Maintain BUY .

—Edelweiss Securities

TVS Motor Company
Reco: Rs 84,
Target: NA

TVS targets to sell 20 lakh vehicles in FY11 by expanding its manufacturing capacity. In addition, TVS expects better profitability in the coming years led by an increase in two-wheeler sales, expansion of market share in two-wheeler segment and rising sales of three-wheeler products. It intends to increase its market share in the two-wheeler segment, on the back of overall growth in the segment and its product offerings.

— Systematix Institutional Research