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The Company was incorporated in 1985, as a joint venture between GEA Energietechnik
GmbH, Germany and the Promoter, Mr. B. G. Raghupathy, to manufacture and sell On-line
Condenser Tube Cleaning Systems. In 1993 Mr. B. G. Raghupathy and members of his
family became the sole shareholders of the Company and began to expand the range of
product and services range in the Power and Oil & Gas industries. On June 28, 2007 the
Company name was changed from GEA Energy System (India) Limited, to BGR Energy
Systems Limited.
Key Investment Arguments:
Over the past 10 years, BGR has transformed itself into a full-fledged power plant EPC
contractor, from being equipment manufacturer and BoP contractor.
As the next stage of integration, the company will set up facilities to manufacture boilers
and turbine-generators in technical and financial collaboration with Hitachi. BGR is the only
company in India, after BHEL and L&T, to have integrated manufacturing for BTG.
Recent Highlights:
BGR Energy recently received an order worth Rs21.68b for BoP works for a 2x 660MW
super-critical project in Andhra Pradesh. This contract was awarded by Gayatri Projects
(Andhra Pradesh) and Sembcorp (Singapore) consortium to BGR Energy.
BGR had an order-book of Rs105b (at the end of 1QFY11), implying BTB of 2.6x TTM
revenue. BGR is in an advanced stage of execution of two power projects, of 1,200MW in
Rajasthan and 600MW in Tamil Nadu. BGR has booked Rs27b of revenue from the projects
and the remaining Rs53b will be booked in FY11 and FY12. .
Valuation and view:
We expect BGR to post earnings of 37% CAGR over FY10-12. But faster execution of EPC
projects in hand and new large BoP projects can provide upside in FY12. We believe BGR is
well placed in several EPC orders, which will ensure encouraging growth beyond FY12.
Strong earnings growth, the likelihood of strong order inflows and success in some of
breakthrough orders like NTPC bulk tenders will support valuations. The stock trades at 14x
FY12E earnings.
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