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Bharat Heavy Electricals
Further delay in bulk tendering
NTPC has been asked to defer the opening of price bids by the Delhi High Court
for the boiler orders which is part of NTPC's bulk tender for supercritical
equipment. While BHEL is likely to get orders, pricing will be keenly watched. We
have a Buy rating on BHEL. the stock trades at 16x our FY12F EPS.
Event
! NTPC likely to defer opening of price bids for boiler orders, which is part of NTPC's bulk
tender for supercritical equipment
Background
! Today (Jan 20) is the last day for submission of price bids for the boiler order which is part of
NTPC's bulk tender for supercritical equipment.
! Three out of four players had made the technical shortlist - BHEL, L&T-Mitsubishi and BGRHitachi.
! However, the price bids will not be opened today as the Delhi HC has asked NTPC to defer
opening them. The fourth player Ansaldo has gone to court. The next hearing is on Feb 3.
Impact and view
! This is likely to delay opening of the price bids by a few days. The process of bulk tender was
kickstarted in October 2009 but had to go through another round of bidding following the L&TMitsubishi combine's disqualification in July 2010.
! While BHEL is likely to get some orders, pricing will be keenly watched as we believe that is a
more important data point than winning orders.
! BHEL has been competitive in recent orders, emerging the lowest bidder against BGR-Hitachi
for the Rajasthan project of two plants of 2 x 660MW each.
! We have a Buy rating on BHEL. The stock trades at a 16x FY12F PE.
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