stock Views on IL&FS TRANSPORTATION, HUL,

HSBC on HUL

HSBC reiterates `Neutral' rating on HUL with a target price of 270, and implies a potential return of 2.7% including the anticipated dividend yield of 2.6%. HUL is the largest FMCG company (excluding tobacco and spirits) in India, with a presence in categories such as soaps, detergents, shampoo, toothpaste, skin care, tea, coffee, and processed foods. Half of its top line comes from soaps and detergents, which are relatively well penetrated categories, and hence top-line growth for HUL is likely to be slower than that of its peers who have a different category mix. P&G has become increasingly active in India, increasing price competition in the detergents segment, which is likely to hurt margins for HUL. The company has robust financials, with 80%+ RoE and a strong net cash position. HSBC values HUL at 23x FY2012E EPS to arrive at the target price of 270. Currently, HUL is trading at 26.5x FY11E EPS, above the 25x historical average.

GOLDMAN SACHS on IL&FS TRANSPORTATION

Goldman Sachs initiates coverage on IL&FS Transportation Networks (ITNL) with a `Buy' rating and a 12-month target price of 353. ITNL is a leading BOT road infrastructure operator involved in designing, operating, maintaining, and facilitating surface transport infrastructure projects. The company has a differentiated business model-generating value at the pre-construction phase of a road project. The stock currently trades at 12.9x FY11E P/E versus. 21.8x median P/E for Indian infrastructure companies under the coverage. 1) ITNL has 1,673 lane km of road projects under construction and 3,683 under development as of March 31, 2010. 2) Goldman Sachs expects five projects worth 7700 crore to achieve financial closure in the medium term, thus augmenting its financial and operational ability. 3) Order wins over the next 6-12 months from the 5900-crore projects in which the company is currently at the Request for Proposal (RFP) stage of bidding should further strengthen its robust order book. The 12-month target price of 353 is based on various projects in ITNL's portfolio, value from Elsamex, and construction-related services. The target price implies 14.9x FY11E P/E and 9.8x FY12E P/E-32% and 40% discount to the Indian infrastructure peer group median, respectively.