Capital Goods
For the quarter ended September 2010, order inflow for companies has remained muted. It is expected that inflow will pick-up in the 2HFY11, especially for the T&D segment. We continue to prefer BHEL and Crompton Greaves in the capital goods space.
ABB
• Expect revenue growth of 11% YoY to `16,309mn. Margins can surprise negatively, if more losses are booked in rural electrification projects.
Areva T&D India
• Expect revenue growth of 16.9% YoY to `8,646mn and marginal improvement in margin.
BHEL
• We expect strong revenue growth to continue on the back of robust order-backlog and execution; expect revenue growth of 22.3% YoY to `81,026mn. Margin expected to remain steady backed by cost-saving measures initiated by the company.
Crompton Greaves
• We expect moderate revenue growth of 5.4% YoY to `23,078mn, which is in line with our full year expectations. The moderate growth is due to lower pick-up in execution in the domestic power segment and partial recovery in the overseas distribution market. Margins can once again surprise positively due to better growth in domestic consumer and industrial segments.
Siemens
• Expect strong revenue growth of 16% to `28,829mn. Growth would be led by a pick-up in power and industrial segments, aided by the low base of 4QFY09. EBIDTA Margin could be lower vs our expectation of ~12% and is the key risk.
Suzlon Energy
• We expect a marginal pick-up in execution to about 400MW leading to positive absolute EBIDTA for the quarter. PAT losses would continue to be led by high interest and depreciation costs.
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