ITC, Thermax, Gokaldas, IGL, Patni

UBS on ITC

ITC's FY07 cigarette growth, at 7%, was in line with our estimate, and cigarette segmental revenue growth was 13.3%, aided by an estimated 2-2.5% of weighted price increase and 3-3.5% mix improvements. Gross revenue grew 20.2%, and net revenue grew 26.3%. FY07 operating profits rose 19% YoY. PBT was up 20% but a higher tax rate caused PAT to grow by a little less (18.4%).

Our price target of Rs160 is benchmarked against 18x FY08E earnings, which is the mid-point of ITC's long-term trading band. We maintain our Neutral 2 rating.

Prabhudas Lilladher on Gokaldas Exports

Based on the revised earnings estimates of Rs 24.3 and Rs 31.0, the stock is trading at PER of 9.1x and 7.1x FY08E and FY09E respectively. We maintain our BUY rating on the stock given the attractive valuations and set a 12-month price target of Rs 291 (12.0x FY08E EPS) giving an upward return of 32%.

Man Financial on IGL

Indraprastha Gas Ltd.’s (IGL) Q4FY07 results were much ahead of our expectations with positive surprise in sales volume
• Net sales were up by 21.1% at Rs 1,643mn while net profit was up by 35.6% YoY at Rs 401mn.
• Increase in CNG and PNG volumes by 11.6% and 44.4%, respectively, boosted revenue and net profit growth
• We maintain our Buy rating on the stock and a target price of 135

Citigroup on Patni Computers

Significant outperformance — After outperforming the BSE IT index by 50% in the past 2 months, we downgrade Patni to Sell/Medium Risk. High valuations, coupled with execution risks, tilt the risk-reward profile to the downside.

Why we had upgraded the stock? — We had upgraded Patni based on thefollowing: (a) cheap valuations; and (b) it being an M&A candidate with its cheap valuations and decent size.

Target price at Rs565 — The apparent M&A premium in the current valuations,putting the stock on a par with Satyam, is difficult to justify, in our view. An upside risk remains potential M&A announcements. Our new target price is Rs565, based on a 15% discount to Satyam.

Citigroup on Thermax

Strong recurring PAT growth — Thermax reported Q407 consolidated recurring PAT of Rs668mn, up 74% YoY and 35% ahead of our expectations. Higherthan- expected revenues, EBITDA margins, other income and lower-thanexpected taxes helped boost recurring PAT growth.

Order backlog up 66% YoY, guidance positive — Thermax FY07 end order backlog was Rs36.72bn, up 66% YoY. Management has guided for more than 40% revenue growth in FY08. We await further details in the conference call to be held on May 30.

Maintain Buy (1L) — Thermax remains one of our top picks in the Electrical E quipment and Engineering space. TARGET of Rs 562