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Bharat Heavy Electricals
Ansaldo Out - Doosan In @
NTPC bulk tender
„Survival of the fittest in NTPC 9x800MW Tender; Buy BHEL
NTPC bulk tender saw 5 bids each in Boiler, where only 2 bidders can win orders
and TG, where 3 bidders can win including BHEL. In boilers, Doosan was the new
entrant, while Ansaldo exited on its rift with NTPC, sealing its fortunes. We see
intense competition among non-BHEL bidders as fortunes of Doosan and
Thermax in boiler and BGR in B&TG, will be sealed based on their ability to win
orders here. Bids now go for technical qualifications. BHEL could win orders for
minimum 4 / max 5 B&TG worth Rs88-110bn (12-15% of FY12E Inflows). Buy
BHEL on visibility of 22% EPS CAGR over FY11-13E with a backlog at 3.4x
FY12E sales and improved competitiveness, trading at 11.6x our FY13E.
7.8GW order likely by 3QFY12; BHEL could win ~3.2-4GW
NTPC likely to award 800MW bulk order worth Rs180bn - for its 3x800MW Kudgi,
2x800MW Lara, 2x800MW Darlipalli and 2x800MW Gajmara power projects, by
3QFY12. If BHEL is lowest bidder (L1), it could get orders for 5 (Boiler) / 5 (TG)
x800MW but if it is L2/L3, as per the tender, it would still win orders for 4 (Boiler) /
4 (TG) sets at L1 price. This would add visibility of 12-15% of FY12E order
Inflows. Boiler tender received bids from - BHEL, Doosan, BGR-Hitachi (BGRH),
L&T-MHI and Thermax-Babcock (TBW). Turbine-Generator (TG) tender was bid
by - BHEL, BGRH, L&T-MHI, Bharat Forge-Alstom (BFA) and JSW-Toshiba.
40% of orders in 4Q despite cloudy skies; Backlog & margin up
BHEL booked 40% of its FY11 inflows in 4Q despite slippage of Rs125bn (21% of
inflows) to FY12E. This validates our thesis (read BHEL) of acceleration in inflows
during 4QFY11 (Table 2 & 4) despite weak sentiments towards capex, based on
our on-ground research. This helped BHEL grow backlog 14%YoY despite market
concerns of rising competition, weak SEB finances and coal shortages impacting
the same. In the 6th year of Chinese competition, BHEL’s FY11 EBITDA margins
expanded 197bps on 199bps fall in employee, which was commendable
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Bharat Heavy Electricals
Ansaldo Out - Doosan In @
NTPC bulk tender
„Survival of the fittest in NTPC 9x800MW Tender; Buy BHEL
NTPC bulk tender saw 5 bids each in Boiler, where only 2 bidders can win orders
and TG, where 3 bidders can win including BHEL. In boilers, Doosan was the new
entrant, while Ansaldo exited on its rift with NTPC, sealing its fortunes. We see
intense competition among non-BHEL bidders as fortunes of Doosan and
Thermax in boiler and BGR in B&TG, will be sealed based on their ability to win
orders here. Bids now go for technical qualifications. BHEL could win orders for
minimum 4 / max 5 B&TG worth Rs88-110bn (12-15% of FY12E Inflows). Buy
BHEL on visibility of 22% EPS CAGR over FY11-13E with a backlog at 3.4x
FY12E sales and improved competitiveness, trading at 11.6x our FY13E.
7.8GW order likely by 3QFY12; BHEL could win ~3.2-4GW
NTPC likely to award 800MW bulk order worth Rs180bn - for its 3x800MW Kudgi,
2x800MW Lara, 2x800MW Darlipalli and 2x800MW Gajmara power projects, by
3QFY12. If BHEL is lowest bidder (L1), it could get orders for 5 (Boiler) / 5 (TG)
x800MW but if it is L2/L3, as per the tender, it would still win orders for 4 (Boiler) /
4 (TG) sets at L1 price. This would add visibility of 12-15% of FY12E order
Inflows. Boiler tender received bids from - BHEL, Doosan, BGR-Hitachi (BGRH),
L&T-MHI and Thermax-Babcock (TBW). Turbine-Generator (TG) tender was bid
by - BHEL, BGRH, L&T-MHI, Bharat Forge-Alstom (BFA) and JSW-Toshiba.
40% of orders in 4Q despite cloudy skies; Backlog & margin up
BHEL booked 40% of its FY11 inflows in 4Q despite slippage of Rs125bn (21% of
inflows) to FY12E. This validates our thesis (read BHEL) of acceleration in inflows
during 4QFY11 (Table 2 & 4) despite weak sentiments towards capex, based on
our on-ground research. This helped BHEL grow backlog 14%YoY despite market
concerns of rising competition, weak SEB finances and coal shortages impacting
the same. In the 6th year of Chinese competition, BHEL’s FY11 EBITDA margins
expanded 197bps on 199bps fall in employee, which was commendable
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