Bharat Bijlee Ltd Negative surprise from transformers ::Emkay

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��

Bharat Bijlee Ltd

Negative surprise from transformers

ACCUMULATE

CMP: Rs998                                        Target Price: Rs1,110

---

n     Q4 APAT of Rs46mn (down 73% yoy) is a negative surprise - led by rev. (Rs2.1bn vs est Rs2.8bn) & EBITDA margins (3.7% vs est 12.7%). PAT helped by part sale of Siemens investment

n     Transformers yet again surprised negatively- FY11P EBITDA margins (8.5%) lower by 260bps - though first 3 qtrs were ok. With ambiguity on margins in 12E/13E - we build in 8.5%

n     However, we continue to believe that motors business with 40% growth in FY11P with EBITDA margins (12.8%) improvement of 170bps is likely to shelter transformers

n     Reduce FY12E EPS by 35% & introduce FY13E EPS Rs89.2/share. At 3.8x FY13E EV/EBITDA (adj. for siemens stake at 30% discount), valuations at 10% disc peers. Given ambiguity on margins, lower the rating to Accumulate