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Bharat Heavy Electricals
Bulk tender gets delayed further
Price bid for boilers, part of NTPC's bulk tender, was to open today but has been
deferred, with the high court having another hearing on Feb 10. It has directed
NTPC not to open price bids till a decision is reached. If it spills beyond March,
FY11 order inflows for BHEL& LT could be at risk.
Event
! Price opening for NTPC boiler tender which was to happen today has been deferred atleast
by a week with Delhi High Court scheduling another hearing on Feb 10 now
! Further, the Delhi HC has asked NTPC not to open any price bids till the court reaches a
decision.
Background
! For the boiler order, as part of NTPC's 11x660MW bulk tender, three out of four players had
made the technical shortlist - BHEL, L&T-Mitsubishi and BGR-Hitachi.
! The fourth player Ansaldo has gone to court. Feb 3 was the date of hearing and Feb 4 was
date for opening of price bids.
! However Delhi HC has scheduled another hearing on Feb 10 now and has asked NTPC not
to open any price bids till the court reaches a decision.
Impact and View
! This is likely to delay opening of the price bids by a few more days. The process of bulk
tender was kick started in October 2009 but had to go through another round of bidding
following the L&T-Mitsubishi combine's disqualification in July 2010.
! If this spills over beyond March, it could put order inflows for Q4 and FY11 for companies like
BHEL and L&T at risk, though the expectation is that it should get finalized by March
! 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.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Bharat Heavy Electricals
Bulk tender gets delayed further
Price bid for boilers, part of NTPC's bulk tender, was to open today but has been
deferred, with the high court having another hearing on Feb 10. It has directed
NTPC not to open price bids till a decision is reached. If it spills beyond March,
FY11 order inflows for BHEL& LT could be at risk.
Event
! Price opening for NTPC boiler tender which was to happen today has been deferred atleast
by a week with Delhi High Court scheduling another hearing on Feb 10 now
! Further, the Delhi HC has asked NTPC not to open any price bids till the court reaches a
decision.
Background
! For the boiler order, as part of NTPC's 11x660MW bulk tender, three out of four players had
made the technical shortlist - BHEL, L&T-Mitsubishi and BGR-Hitachi.
! The fourth player Ansaldo has gone to court. Feb 3 was the date of hearing and Feb 4 was
date for opening of price bids.
! However Delhi HC has scheduled another hearing on Feb 10 now and has asked NTPC not
to open any price bids till the court reaches a decision.
Impact and View
! This is likely to delay opening of the price bids by a few more days. The process of bulk
tender was kick started in October 2009 but had to go through another round of bidding
following the L&T-Mitsubishi combine's disqualification in July 2010.
! If this spills over beyond March, it could put order inflows for Q4 and FY11 for companies like
BHEL and L&T at risk, though the expectation is that it should get finalized by March
! 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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