Angel - IGL, Mahindra & Mahindra

Angel on IGL

Over the next two-three years, we expect IGL to achieve size and maintain the growth
momentum. CNG sales are expected to receive a boost going ahead on the back of an increase in the conversion of private cars as well as new CNG buses. Given the aggressive capex plan to expand its CNG and PNG network, the company is likely to achieve overall double-digit volume growth. The company has secured from GAIL for 2.0 mmscmd of gas supply till 2010 whereas on an average it has utilised only 1.3mmscmd in FY2007. Hence, the supply-side woes are phased out for the time being. We expect IGL to post net Revenues of Rs725.7cr and Rs834.9cr with PAT of Rs160.9cr and Rs185.8cr in FY2008E and in FY2009E, respectively. At the CMP, the stock is available at 10.4x and 9.0x FY2008E EPS of Rs11.5 and FY2009E EPS of Rs13.3. We maintain a Buy on the stock with a Target Price of Rs160.

Angel on Mahindra and Mahindra

At the CMP, M&M trades at 17.4x FY2008E and 15.9x FY2009E Earnings. High growth potential of its subsidiaries is expected to unlock actual value of the stock. Our SOTP Target Price for M&M works out to Rs960 wherein its core business fetches Rs558 and subsidiaries Rs402. We maintain a Buy on the stock.