Visit http://indiaer.blogspot.com/ for complete details �� ��
BGR Energy (BGRL IN, INR 571, Buy)
BGR Energy Systems (BGR), on November 26, clarified its position on the recent bank loan matter being investigated by CBI. Management stated that the company has not borrowed from LIC Housing Finance and it has no dealings with Money Matters for any debt arrangement/ syndication. Bank of India (BoI) had been part of the 11 bank consortium led by IDBI Bank for raising INR 38.5 bn. The bank had approved INR 5 bn towards the company’s EPC project. The loan had been approved (by Mumbai branch) through the Chennai branch and hence CBI has sought clarity from BGR.
n No wrong doing in bank loan issue
BGR today clarified its position regarding the loan approval from BoI. The debt syndication consortium had been led by IDBI Bank for INR 38.5 bn towards its large EPC project (Kalisindh TPP, worth INR 49 bn) at Jalawar, Rajasthan. BoI was a part of the consortium and had approved INR 4.7 bn (INR 3.8 bn towards bank guarantee for LC and INR 0.9 bn towards normal debt). BGR has drawn about INR 3.3 bn towards LC and INR 0.2 bn towards normal debt. The loan had been approved two years ago from the Mumbai branch when the concerned BoI personnel was posted at the Chennai branch, which is under the lens for certain large loan approvals. BGR stated that it has furnished required details regarding the loan approval to concerned authorities.
n Outlook and valuations: Positive; maintain ‘BUY’
New orders continue to be extremely critical for BGR for revenue visibility in FY12 and FY13. Management continues to be confident regarding bagging atleast one of the two EPC orders from Rajasthan SEB worth INR 60-65 bn each. The JV with Hitachi for BTG manufacturing seems to be on track with the manufacturing location finalized near Chennai. The company is likely to face competition in the EPC space with many new entities vying for orders. With in-house manufacturing of various BTG and BOP components besides in-house design engineering, the company seems to have an edge. Entry into the private sector with a super-critical order was an important milestone for the company. The stock has traded at an average of 15x one-year forward PE since its listing in January 2008. Currently the stock is trading at 11.9x one-year forward PE, which is below the 2 years average PE of 12.2x. The stock is currently trading at attractive valuation of 14.1x, and 10.8x its FY11E and FY12E earnings respectively. We reiterate our ‘BUY/ Sector Outperformer’ recommendation/ rating on the stock.
No comments:
Post a Comment