HSBC expects net loss of Jet Airways in July-Sept to widen to Rs350 crore and also raised loss estimate for FY12. Jet will report second quarter earnings results on 11 November.

HSBC India CEO Naina Lal Kidwai. (File photo)

Higher jet fuel price, the rupee’s weakness that raises interest cost of dollar debt, relatively higher cost base of JetLite and lower load facotrs are the main reasons for loss forecast for the coming quarters, it said.

HSBC has cut target price of Jet Airways to Rs275 from Rs500 maintaining a ‘neutral’ rating.

At 12.54 p.m., shares of Jet Airways were at Rs261.80, up 3.66%.

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Credit Suisse slashes SAIL target price to Rs87

Credit Suisse has cut the target price of Steel Authority of India Ltd (SAIL) to Rs87 from Rs100 and maintained its ‘underperform’ rating for the state-run steelmaker.

The cut was primarily on the back of rising raw material cost, highest employee costs per tonne and further wage hike for non-executives due in first week of January, 2012.

Rising iron ore costs hid the impact of the past wage hikes, FY07-11 iron ore prices rose $98 per tonne, adding $165 per tonne to SAIL’s EBITDA, masking the structural change in staff costs as well as the industry-wide squeeze in smelting margins, Credit Suisse said in a note.

At 12.25 pm shares in SAIL were at Rs112.95 up 1.89%.

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SBI to fall over next 15 days

Morgan Stanley expects the share price of State Bank of India (SBI) to fall in absolute terms over the next 15 days on back of concerns over weakness in asset quality.

“In the state owned enterprise bank earnings reporting till now, we have seen material weakness in asset quality - with commentary on the future also weak.

We expect SBI to follow these other banks and this can impact the stock price," said Morgan Stanley, in a tactical research idea. The research house an ‘underweight’ rating on the stock with a target price of Rs1,550 driven by concerns over asset quality and adequate capital levels.

At 9:47 a.m. shares of SBI were at Rs1,908, up 0.35%.

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PNB falls on concerns over sharp pick up in restructured loans

Shares of Punjab National Bank (PNB) fall after a closer study of Q2 results reflected sharp pick up in restructured loans and renewed concerns over asset quality, said two institutional dealers.

“The strong headline (numbers in Q2) masked the underlying asset quality issues, which were reflected in the Rs4,050 crore addition to the restructured loan balance. Impaired loan creation (gross non-performing loans + restructured) was at 8.3% of loans, annualized," said Morgan Stanley.

The research house says that restructuring of loans given to Tamil Nadu State Electricity Board and Aban Lloyd were the key accounts that drove the increase in restructured loans, but even after excluding these accounts the level of restructuring done this quarter was still high.

At 9:39 a.m. shares of PNB were at Rs972.8, down 3.97%.

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