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India Equity Research Reports, IPO and Stock News
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LARSEN & TOUBRO LTD
PRICE: RS.1590 RECOMMENDATION: ACCUMULATE
TARGET PRICE: RS.1906 FY12E P/E: 19.0X
Media reports indicate that Doosan and BHEL have emerged as the winning
bids for the NTPC bulk tender of nine boiler units of 800 MW. In the TG
bidding, BGR has emerged as the L1 while L&T emerges as the L2 bidder.
The entry of fresh competition from Doosan is incrementally negative for
players like L&T and BHEL given the backdrop of significant slowdown in
power generation equipment market. In the TG bidding, the price quoted
for bids are lower than that for earlier bulk tender underscoring rising
competitive intensity in power generation equipment market.
We maintain ACCUMULATE on L&T with an unchanged price target of
Rs.1906.
n As per media reports Doosan and BHEL have emerged as the winning bids for
the bulk tender of nine boiler units of 800 MW. Doosan and BHEL (by virtue to
being assured atleast four units) gets to supply five and four boiler units of 800
MW respectively. The other bidders in the fray were L&T, BGR Energy and
Thermax.
n In Turbine Generator bulk tender, BGR Energy has emerged the lowest bidder
and would deliver 5 units of 800 MW. L&T (emerged L2) and BHEL (by virtue of
being assured of atleast two sets) gets to supply two units each of 800 MW.
n As compared to the early bids for 11x660 MW Turbine Generators, pricing appears
to be much more competitive for the nine units of 800 MW. Presented
below are bids quoted by various players for the TG tenders.
n The price/MW quoted for the 9x800 MW TG tender is lower than the one for
11x660 MW tender.
n Difference between the L1 bids for TGs for these two tenders is as much as
18%, thus underscoring the higher competitive intensity for 9x800 MW units.
Also, this time round, the number of players were higher at five as compared to
three for the 660 MW tenders.
n Incrementally negative for players like L&T given the backdrop of significant
slowdown in power generation equipment market. Order placement in this sector
has virtually fallen to a trickle in recent months due to issues related to coal
availability, change in foreign government policies on coal imports and SEB
financials. The management indicated that apart from NTPC bulk tenders worth
14.4 GW, the company has outlined orders worth 15 GW consisting of its own
development projects as well as external projects. Given the uncertain situation,
the outlook for order intake can vary in a wide range (depending on its success
in the bulk tenders).
n Power sector contributed 32% of order intake in FY12 but reported a 56% yoy
decline in Q1 FY12. In our previous update, we had highlighted that if order intake
in the power sector remains at the previous year's level, then the non
power sector order intake needs to grow at 22% in FY12 to meet the lower end
of order intake guidance of Rs 916 bn. This could be a tall task given that most
contracting companies have reported sharp drop in order intake and have
sounded circumspect on their annual guidance.
Valuation and Rating: Maintain Accumulate with a unchanged
target price of Rs 1906
On a FY12 basis, L&T is trading at 19.0x and 13.8x PE and EV/EBITDA respectively.
We maintain ACCUMULATE rating with unchanged target price of Rs 1906.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
LARSEN & TOUBRO LTD
PRICE: RS.1590 RECOMMENDATION: ACCUMULATE
TARGET PRICE: RS.1906 FY12E P/E: 19.0X
Media reports indicate that Doosan and BHEL have emerged as the winning
bids for the NTPC bulk tender of nine boiler units of 800 MW. In the TG
bidding, BGR has emerged as the L1 while L&T emerges as the L2 bidder.
The entry of fresh competition from Doosan is incrementally negative for
players like L&T and BHEL given the backdrop of significant slowdown in
power generation equipment market. In the TG bidding, the price quoted
for bids are lower than that for earlier bulk tender underscoring rising
competitive intensity in power generation equipment market.
We maintain ACCUMULATE on L&T with an unchanged price target of
Rs.1906.
n As per media reports Doosan and BHEL have emerged as the winning bids for
the bulk tender of nine boiler units of 800 MW. Doosan and BHEL (by virtue to
being assured atleast four units) gets to supply five and four boiler units of 800
MW respectively. The other bidders in the fray were L&T, BGR Energy and
Thermax.
n In Turbine Generator bulk tender, BGR Energy has emerged the lowest bidder
and would deliver 5 units of 800 MW. L&T (emerged L2) and BHEL (by virtue of
being assured of atleast two sets) gets to supply two units each of 800 MW.
n As compared to the early bids for 11x660 MW Turbine Generators, pricing appears
to be much more competitive for the nine units of 800 MW. Presented
below are bids quoted by various players for the TG tenders.
n The price/MW quoted for the 9x800 MW TG tender is lower than the one for
11x660 MW tender.
n Difference between the L1 bids for TGs for these two tenders is as much as
18%, thus underscoring the higher competitive intensity for 9x800 MW units.
Also, this time round, the number of players were higher at five as compared to
three for the 660 MW tenders.
n Incrementally negative for players like L&T given the backdrop of significant
slowdown in power generation equipment market. Order placement in this sector
has virtually fallen to a trickle in recent months due to issues related to coal
availability, change in foreign government policies on coal imports and SEB
financials. The management indicated that apart from NTPC bulk tenders worth
14.4 GW, the company has outlined orders worth 15 GW consisting of its own
development projects as well as external projects. Given the uncertain situation,
the outlook for order intake can vary in a wide range (depending on its success
in the bulk tenders).
n Power sector contributed 32% of order intake in FY12 but reported a 56% yoy
decline in Q1 FY12. In our previous update, we had highlighted that if order intake
in the power sector remains at the previous year's level, then the non
power sector order intake needs to grow at 22% in FY12 to meet the lower end
of order intake guidance of Rs 916 bn. This could be a tall task given that most
contracting companies have reported sharp drop in order intake and have
sounded circumspect on their annual guidance.
Valuation and Rating: Maintain Accumulate with a unchanged
target price of Rs 1906
On a FY12 basis, L&T is trading at 19.0x and 13.8x PE and EV/EBITDA respectively.
We maintain ACCUMULATE rating with unchanged target price of Rs 1906.
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