Kotak - NTPC, Tata Power,Shriram Transport Finance, Cairn India

Kotak Institutional in their report on NTPC

NTPC reported net sales of Rs88.6 bn, EBITDA of Rs23.4 bn and net profit of Rs17.4 bn for 4QFY07 as against our estimate of Rs80.6 bn, Rs20.9 bn and Rs14.8 bn respectively.

Better than expected operating performance, higher prior period revenue and other
income (including forex gains) resulted in the company reporting higher than expected
profits. Higher fuel expenses (usage of naphtha and spot LNG) further contributed to
higher revenues. NTPC has also made additional provisions for the pending pay revision of the employees w.e.f. January 1, 2007. The reported net sales of Rs326.3 bn for FY2007 includes income tax of Rs16.76 bn recovered through tariffs. The tax recovered through tariffs was earlier not included in the reported revenues. We will revisit our estimates after the conference call when more details on operating performance and non-recurring income/expenses are available. We retain our In Line rating on the stock with DCF based target price of Rs160/share.

Kotak Institutional in their report on Tata Power

Tata Power (TPC) reported 19% decline in revenues and 97% decline in EBITDA during
4QFY07 as against our estimate of 42% decline in revenues and 75% decline in EBITDA. The year-end results are lower due to the reversal of tax provisions of earlier years resulting in a net surplus of Rs2.42 bn over the reasonable return requirement. MERC in its tariff order for Tata Power had adjusted the net deficit of previous years against available reserves and also used the residual reserves of Rs0.62 bn for reducing the applicable tariffs for FY2007. FY2007E are impacted by one-off adjustment to tariffs and FY2008E reflect the normalized earnings based on FY2007 tariff order. We note that TPC has filed a petition seeking the review of the tariff order and has not made any adjustments in the accounts till now. Reported profit of Rs0.93 bn (our est. loss of Rs0.37 bn) includes a large other income of Rs1.78 bn (Rs0.29 bn from sale of investments) compared to only Rs0.53 bn last year. We will revisit our estimates when more details on the other income and operating performance of the company are available. We retain our In Line rating with SOTP based target price of Rs670/share.

Kotak Institutional in their report on Shriram Transport Finance

STFC's net profit was up 28% yoy to Rs484 mn supported by growth in net operational income (Rs1,829 mn) up 37% yoy. Key highlights: (1) Moderate disbursements growth in 4QFY07 of 24% yoy as against 73% in 3QFY07- nevertheless disbursements were ahead of our estimates, (2) spreads have likely been stable, (3) Gross NPLs increased to 1.9% in 4QFY07 from 1.2% in 3QFY07 - this is a concern and we will ascertain reasons for the same. We will revisit our estimates after the conference call with management. Retain OP with target price of Rs155.

Kotak Institutional in their report on Cairn India

An unconfirmed Bloomberg report has cited that Cairn India may be barred from building a pipeline to transport crude from its Rajasthan fields. Instead, the government wants Cairn to reduce plateau crude production to 80,000 b/d from the currently planned 150,000 b/d and ONGC to build a refinery to use the crude oil. We see absolutely no logic for sub-optimal production of crude oil and refinery capacity and do not expect such an eventuality. Nonetheless, this development, if confirmed, could have a significant impact on the valuations of Cairn India. We have previously highlighted the pending issue of crude evacuation as a key downside risk; however, we have seen this more as a financial issue (cost recovery). We maintain our earnings estimates and our 12-month DCF-based target price of Rs130.