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BHEL bags order worth `3,800cr
BHEL secured an order from Dainik Bhaskar Power Limited (DBPL) for setting up a
1,320MW supercritical thermal power plant in Madhya Pradesh. Valued at `3,800cr, the
scope of work includes the manufacturing and commissioning of supercritical boilers,
steam turbines and turbo generators (BTG package) as well as supplementary job,
including transformers and switchyard. This is a repeat order from DBPL and comes as an
added positive, given that the current scenario in the power segment is dismal, plagued by
various reasons, and it has witnessed a considerable slowdown. BHEL’s order book stands
at ~`1.7tn (4.8x FY2011 revenue).
Notably, BHEL’s realisation of `2.9cr/MW on this order is higher by 10% than that of the
recent NTPC bulk tender BTG package (`2.6cr/MW), thereby citing potency on its
profitability front. However, we believe that finalisation of this order would have happened
well before the NTPC bulk tender and, hence, is unreasonable for comparison.
Nonetheless, going ahead, BHEL is likely to be stressed – competition kicking in as well as
a limited order pipeline in near-to-medium term will result in pricing pressures. Hence, we
believe it will be extremely difficult for BHEL to maintain its superior margins and market
share in the long run. With concerns likely to play out and absence of a re-rating catalyst,
we remain Neutral on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
BHEL bags order worth `3,800cr
BHEL secured an order from Dainik Bhaskar Power Limited (DBPL) for setting up a
1,320MW supercritical thermal power plant in Madhya Pradesh. Valued at `3,800cr, the
scope of work includes the manufacturing and commissioning of supercritical boilers,
steam turbines and turbo generators (BTG package) as well as supplementary job,
including transformers and switchyard. This is a repeat order from DBPL and comes as an
added positive, given that the current scenario in the power segment is dismal, plagued by
various reasons, and it has witnessed a considerable slowdown. BHEL’s order book stands
at ~`1.7tn (4.8x FY2011 revenue).
Notably, BHEL’s realisation of `2.9cr/MW on this order is higher by 10% than that of the
recent NTPC bulk tender BTG package (`2.6cr/MW), thereby citing potency on its
profitability front. However, we believe that finalisation of this order would have happened
well before the NTPC bulk tender and, hence, is unreasonable for comparison.
Nonetheless, going ahead, BHEL is likely to be stressed – competition kicking in as well as
a limited order pipeline in near-to-medium term will result in pricing pressures. Hence, we
believe it will be extremely difficult for BHEL to maintain its superior margins and market
share in the long run. With concerns likely to play out and absence of a re-rating catalyst,
we remain Neutral on the stock.
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