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India Equity Research Reports, IPO and Stock News
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TP : Rs2,150
Recommendation Rationale
§ Direct play on the power sector à Sector currently plagued with multiple issues
§ Sector witnessing systemic delays owing to à coal linkages, financial closures amidst high interest rates,
collapse of merchant rates
§ Intense competitive atmosphere à both from domestic and international players
§ Looming risk to FY12E order inflows target of 10% growth à could create disappointment
§ In Q1FY12, secures orders worth Rs25 bn or 4% of FY12E target of Rs667 bn - lowest in past 24 quarters
§ Target order inflows factor some contribution from 11X660 MW or 9X800MW NTPC orders - judgment by
Supreme Court awaited
§ Order book down 2% qoq to Rs1596 bn as on Jun’11 à though order book cover remains healthy at 3.7X
§ Expect earnings growth momentum to decelerate to 3% CAGR during FY11-13E period to Rs139.4 per share in
FY13E
Valuations – No earnings or re-rating catalysts
§ At 12.2X FY13E earnings and considering free cashflow generating business model and strong ROIC, valuations
appear not demanding
§ There is a lack of earnings or PER re-rating catalyst – We recommend HOLD rating
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