Thermax, HPCL, NTPC, IVRCL

SSKI on Thermax

Thermax has reported strong Q4FY07 results, which were broadly in line with our expectations with consolidated net profit growth of 74.3%yoy to Rs668m. However, operating margins fell 80bp yoy to 12.4% owing to raw material price pressure and higher proportion of lower margin products. Topline growth of 65%yoy has been driven by a healthy order book as well as operational improvement. Going forward with the closure of ME Engineering, robust order inflow and stable raw material cost will drive earnings. Led by favorable macro economic fundamentals, Thermax has guided for 40% revenue growth for FY08. To factor in robust earnings momentum we are increasing our FY08 and FY09 EPS estimates by 7.2% and 8.1% to Rs24 and Rs32.9 respectively. We estimate 40% CAGR in Thermax's consolidated earnings over FY07-09. Reiterate Outperformer with a revised price target of Rs 590

SSKI on HPCL

Hindustan Petroleum Corporation's (HPCL) Q4FY07 results - net profit of Rs 5.5 bn - were below our estimates, due to lower than expected refining margins. Oil bonds amounting to Rs 10bn and upstream share of Rs11.4bn more than offset the negative impact of under recovery impact of Rs 16.1bn. We upgrade the stock to Outperformer to factor in an expected improvement in fuel marketing margins driven by lower crude prices. Reiterate outperformer with a price target of Rs 375.

ENAM on NTPC

Rich valuations, Maintain Neutral
NTPC’s Q4FY07 profits were in-line with our estimates, if adjusted for extraordinary expenditure of Rs 3bn. As of now, we maintain our FY08E earnings and await greater clarity from the management on the capacity adds. Given the rich valuations (2.5x FY08E BV), the near term earnings seem fully factored in. We maintain a sector Neutral rating.

ENAM on IVRCL

The company has guided for Rs 33bn of revenues in FY08 and a marginal improvement in OPM; higher than its initial guidance of Rs 30bn in sales. Given the current order backlog and high intake capacity of the company due to increased net worth, we believe a 30% CAGR is achievable over FY07-09E. However, we are factoring in a full tax rate until further clarity on the same. Accordingly, our FY08E earnings stand revised upwards by 8%. We have also introduced FY09 earnings estimate of Rs 2.1bn