(recasts with analysts' quotes, detail)
By Shailendra Bhatnagar and Arif Sharif
NEW DELHI, Jan 31 (Reuters) - The Indian government plans to complete an initial public share offer of the country's biggest carmaker before the end of March and official figures indicated it could price it in a band of 1,944 to 2,222 rupees a share.
The New Delhi-based automaker, in which the government holds 45.54 percent stake and Japan's Suzuki Motor Corp 54.2 percent, has a commanding 50 percent share of the domestic car market with its small, low-priced cars.
"We're trying to complete the IPO by March 17," Disinvestment Secretary Pradip Baijal told reporters at an seminar on Friday, adding he expected the sale to raise 7.0 to 8.0 billion rupees.
He said the government was unlikely to complete stake sales of any other state-run firm in the financial year to March 31.
Analysts said the Maruti IPO would set a benchmark for valuing car companies and was likely to be attractive considering the company's dominant market share, its multinational parentage and the likely issue price, which is close to its book value.
It would also give investors a rare exposure to a pure car company. Ten out of 12 Indian carmakers are unlisted and two are diversified, making a range of vehicles.
"For the first time investors can have a quality exposure to one of the top passenger car companies in India," said Avinash Gorakshakar, auto analyst at Emkay Shares and Stock Brokers.
"Maruti has a better financial health compared to its rivals in a very competitive market," he added.
The government plans to sell 25 percent of the carmaker's shares to the public or 3.6 million shares as part of a two step privatisation plan. It will sell the remainder of the stake through another issue in the 2003/04 financial year.
To raise 7.0 billion rupees ($147 million) the government would need to price the shares at 1,944 rupees each and to pull in 8.0 billion, at 2,222 rupees. That band is close to Maruti's book value of 2,047 rupees per share at the end of March 2002.
Indian newspapers have speculated that the offering would be priced at 2,300 rupees. Suzuki agreed to underwrite the first public issue at that price when the firm was privatised in 2001.
SLOW TO TAKE OFF
India's more than a decade-old privatisation programme was slow to take off but gathered pace early last year after the government sold stakes in oil marketing firm IBP Co Ltd and a giant telecoms company, Videsh Sanchar Nigam .
The government had aimed to collect 120 billion rupees through privatisations in the year to March 2003 but now says it will fall way short of the target after a delay in the sale of two cash-rich oil companies.
Slowing sales and higher costs pushed Maruti to its first ever loss of 2.69 billion rupees in the year to March 2001 but it rebounded to a 1.045 billion net profit the following year helped by higher prices, sharp cost cutting and big productivity gains.
Kalpesh Parekh, an analyst at IL&FS group, said Indian automakers traded at about four times forward EV/EBIDTA or the ratio of enterprise value to earnings before interest, depreciation, tax and amortisation.
"At a price of 1,944 rupees Maruti's share would be about five times its EV/EBITDA, a slight premium to its peers but which would be justified giving its dominant position," he said. ($1 = 47.8 rupees)