Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Areva T&D India Ltd----------------------------------------------------- Maintain UNDERPERFORM
1Q below estimates; overall T&D competitive environment remains challenging
● Areva T&D reported weak March quarter results with PAT ~51%
below estimates. We were expecting EBITDA margins to range in
early teens this year, given the cost actions by Areva T&D in the
past, expected improvement in utilisation rates and no ramp up in
costs; however, EBITDA margin of 8.4% was impacted by an
unusual increase in other expenses.
● Order inflow in 4Q of ~Rs13 bn was up 29% YoY but largely in
line with estimates. Order book at ~Rs52 bn grew only 4% YoY
and is indicative of revenue performance over the next few
quarters. Management’s commentary also suggests that market
environment in 4Q was challenging due to pricing decline and low
market growth (due to postponement in power, industrial and infra
ordering activities).
● We believe that given the tough operating environment it could be
difficult for Areva T&D to grow order inflows in FY11 and this
could impact the street’s earnings estimates. We note that Areva
T&D has also announced the demerger of its distribution business
as that has been globally sold to Schneider. We maintain our
UNDERPERFORM rating
We note that this quarter was supported by a low base and hence the
sharp increase in YoY PAT. Areva had just managed to breakeven in
March last year as margins had declined sharply due to 1) ramp up of
costs in new factories (i.e., low utilisation), 2) higher provisioning for a
few systems projects (these are largely SEB related orders), and 3)
derivatives mark-to-market adjustment (Rs90 mn impact).
The Board of Directors has given its approval for the demerger of the
distribution business to a wholly-owned subsidiary (Smartgrid
Automation Distribution and Switchgear Limited). Consequently,
Areva has also begun segment reporting of transmission and
distribution businesses from this quarter.
Figure 3: Segment data
Revenue Rs mn
Transmission 7,470
Distribution 2,808
Less Intersegment revenue (329)
Net sales 9,949
PBIT
Transmission 583
Distribution 48
Unallocated (40)
Less interest (160)
PBT 431
Capital Employed
Transmission 13,882
Distribution 4,005
Unallocated 1,168
Total 19,056
Margins
Transmission 8%
Distribution 2%
Source: Company data, Credit Suisse estimates
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Areva T&D India Ltd----------------------------------------------------- Maintain UNDERPERFORM
1Q below estimates; overall T&D competitive environment remains challenging
● Areva T&D reported weak March quarter results with PAT ~51%
below estimates. We were expecting EBITDA margins to range in
early teens this year, given the cost actions by Areva T&D in the
past, expected improvement in utilisation rates and no ramp up in
costs; however, EBITDA margin of 8.4% was impacted by an
unusual increase in other expenses.
● Order inflow in 4Q of ~Rs13 bn was up 29% YoY but largely in
line with estimates. Order book at ~Rs52 bn grew only 4% YoY
and is indicative of revenue performance over the next few
quarters. Management’s commentary also suggests that market
environment in 4Q was challenging due to pricing decline and low
market growth (due to postponement in power, industrial and infra
ordering activities).
● We believe that given the tough operating environment it could be
difficult for Areva T&D to grow order inflows in FY11 and this
could impact the street’s earnings estimates. We note that Areva
T&D has also announced the demerger of its distribution business
as that has been globally sold to Schneider. We maintain our
UNDERPERFORM rating
We note that this quarter was supported by a low base and hence the
sharp increase in YoY PAT. Areva had just managed to breakeven in
March last year as margins had declined sharply due to 1) ramp up of
costs in new factories (i.e., low utilisation), 2) higher provisioning for a
few systems projects (these are largely SEB related orders), and 3)
derivatives mark-to-market adjustment (Rs90 mn impact).
The Board of Directors has given its approval for the demerger of the
distribution business to a wholly-owned subsidiary (Smartgrid
Automation Distribution and Switchgear Limited). Consequently,
Areva has also begun segment reporting of transmission and
distribution businesses from this quarter.
Figure 3: Segment data
Revenue Rs mn
Transmission 7,470
Distribution 2,808
Less Intersegment revenue (329)
Net sales 9,949
PBIT
Transmission 583
Distribution 48
Unallocated (40)
Less interest (160)
PBT 431
Capital Employed
Transmission 13,882
Distribution 4,005
Unallocated 1,168
Total 19,056
Margins
Transmission 8%
Distribution 2%
Source: Company data, Credit Suisse estimates
No comments:
Post a Comment