Visit http://indiaer.blogspot.com/ for complete details BGR Energy Systems: Management Conference Call Takeaways
Order update — In the fray for two 2X660MW EPC orders in Rajasthan of ~
Rs65bn each with only 2 bidders in the fray BHEL/ BGRL. Bids for both are yet to
be opened. Technical qualification is going on right now. Also in the fray for a
2X660MW IPP BOP order of Rs20bn expected to be decided in next 1-2 months.
Also in the fray for the 11X660MW NTPC-DVC boiler rebid. Targetting Rs80-100bn
of orders in 3QFY11E and Rs120-150bn of orders in FY11E (CIRA - Rs90bn)
Should do > Rs48bn in sales in FY11E — Based on last year end backlog BGRL is
confident of doing Rs48bn of sales in FY11E (CIRA – Rs47bn) and it is possible to
surpass this number if the above mentioned orders materialize on time.
Execution is on track — At both Mettur and Jhalawar. At Mettur the company has
achieved significant milestones like drum lifting/ condenser fabrication. Boiler
hydro test/boiler light up due in Nov10/Mar11. Coal handling and ash handling
system to be completed in Apr11 and plant will be synchronized in May11. BGRL
has received 80-85% of BTG equipment from Dongfang and balance to be got
next month. BGRL has also started working on the transmission network and has
received equipment for the 400kV and 220 kV GIS from Areva T&D.
Strong growth in 2QFY11E — We expect BGRL to report Rs9.5bn of sales in
2QFY11E up 104% YoY. EBITDA margins could contract 178bps to 10.5% and we
expect the company to deliver PAT of Rs579mn up 89% YoY
Maintain Buy: Target price increased to Rs934 — BGRL has underperformed the
BSE Sensex by 13% over last 3 months and trades at in-expensive valuations of
14.3x FY12E, despite robust 1QFY11 PAT growth of 199% YoY on account of a
dry order inflow spell. Inflows in this sector tend to lumpy in nature and recent
underperformance might be a good time to buy the stock. Raising our target price
to Rs934 as we roll forward our target P/E multiple to Mar12E.
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