BGR Energy Systems – Buy With Target Price Of Rs934 :: Citi

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BGR Energy Systems (BGRE.BO)
Alert: PAT Up 154% YoY – Buy With Target Price Of Rs934
 PAT well ahead of expectations – BGRL’s 2QFY11 PAT at Rs778mn up 154% YoY
was 34% ahead of CIRA expectations of Rs579mn on better than expected
execution resulting in sales of Rs11.3bn (v/s CIRA at Rs9.5bn) up 143% YoY.
EBITDA margins at 11.5% was down 80bps YoY but was ahead of CIRA
expectation of 10.5%.
 End of the order inflow drought – BGRL has finally ended its order inflow drought
with Rs22bn BOP win this week and has ended 2QFY11 with a backlog of
Rs105bn down 14% YoY. The company expects backlog of Rs150bn by the end of
FY11E up from Rs102bn at the end of FY10.
 Order pipeline 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 the
11X660MW NTPC-DVC boiler rebid.
 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.