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BHEL
Order pipeline robust; upgrade to Buy
BHEL’s order inflow of 14-15GW is likely to be stable backed by
a healthy order pipeline, despite dip in its market share. It is
gearing up to commission 21GW over FY11-12 via capacity
addition, with industry and exports being the next growth
catalysts. We raise FY11e profit 6% and upgrade BHEL to Buy
on its robust business model and TTM underperformance.
Stable order inflow. We expect thermal equipment orders of 14-
15GW over the next three years on a strong order pipeline despite
loss in market share (47% in XII FYP vs. 59% in XI FYP).
Protective measures favoring domestic companies, though
unlikely before the XIII FYP ordering, may be a positive trigger.
BHEL is gearing for huge commissioning of 21GW over
FY11-12 backed by capacity ramp up to 20GW, BoP
manufacturing and aggressive hiring. Chinese suppliers have
promised fast commissioning; but, due to likely delay in achieving
full load and lower PLFs, plant performance would be critical.
Industry and exports – Growth catalysts. JV/MoUs in
transmission, transportation and renewable energy would drive
growth ahead as we expect rise in order share to 40% by FY17e
from 30% at present.
Valuation and risks. We raise our target price to `2,770 (`2,360
earlier) based on 21x (18x earlier) FY12e EPS; target PE is at 10%
premium to average FY04-10 forward PE. Key risk: slower
execution.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
BHEL
Order pipeline robust; upgrade to Buy
BHEL’s order inflow of 14-15GW is likely to be stable backed by
a healthy order pipeline, despite dip in its market share. It is
gearing up to commission 21GW over FY11-12 via capacity
addition, with industry and exports being the next growth
catalysts. We raise FY11e profit 6% and upgrade BHEL to Buy
on its robust business model and TTM underperformance.
Stable order inflow. We expect thermal equipment orders of 14-
15GW over the next three years on a strong order pipeline despite
loss in market share (47% in XII FYP vs. 59% in XI FYP).
Protective measures favoring domestic companies, though
unlikely before the XIII FYP ordering, may be a positive trigger.
BHEL is gearing for huge commissioning of 21GW over
FY11-12 backed by capacity ramp up to 20GW, BoP
manufacturing and aggressive hiring. Chinese suppliers have
promised fast commissioning; but, due to likely delay in achieving
full load and lower PLFs, plant performance would be critical.
Industry and exports – Growth catalysts. JV/MoUs in
transmission, transportation and renewable energy would drive
growth ahead as we expect rise in order share to 40% by FY17e
from 30% at present.
Valuation and risks. We raise our target price to `2,770 (`2,360
earlier) based on 21x (18x earlier) FY12e EPS; target PE is at 10%
premium to average FY04-10 forward PE. Key risk: slower
execution.
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