Engineering & Capital Goods - PGCIL's second HVDC project on fast track; Edelweiss PDF link

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As per our channel check, Alstom T&D emerged L1 in PGCIL’s 800KV HVDC order of WR-NR corridor from Champa in Chhattisgarh to Kurukshetra in Haryana recently. The order is expected to be worth ~INR25bn and is part of the fifth High Capacity Power transmission corridor (HCPTC) which is worth INR 288bn. The total value of 9 HCPTC corridors in around INR 580bn. As we understand, the bid by L1 player was 10% lower than L2. We consider these price bids aggressive and see operating profitability of the sector clearly at risk.

Alstom T&D outbids ABB-BHEL and Siemens consortiums

Alstom T&D outbids ABB-BHEL and Siemens AG-Siemens India consortiums in the INR25bn HVDC project from Champa (Chhattisgarh)-Kurukshetra (Haryana) NR-WR HVDC Interconnector. There were originally four bidders, namely, ABB-BHEL Consortium, Siemens AG & Siemens India consortium, Alstom T&D and a Chinese participant who was disqualified in the technical round. While the project will be executed by Alstom T&D UK, France and India, a major portion will be executed by overseas entities and Alstom T&D India’s scope could be ~INR5bn.

PGCIL continues ordering momentum; BoD clears HVDC project

While PGCIL has till date (till feb 12) awarded INR155bn worth of orders against INR77bn in the same period last year, it has awarded INR33.7bn in February 2012 against INR19bn during the same period last year. In FY11, PGCIL had awarded INR177bn of orders including the first HVDC order of INR65bn awarded in March 2011. It is highly likely that the total ordering during FY12 may exceed the FY11 ordering of INR 177bn excluding the INR 25bn HVDC order. The BoD of PGCIL has also approved the investment of INR100bn on WR-NR HVDC Interconnector for IPP projects in Chhattisgarh.

Outlook: Strong ordering momentum in T&D; no recovery in pricing

There has been a clear improvement in project awards from PGCIL as seen in data till February 2012 as declared by PGCIL. However, overall pricing in the T&D equipment market (primarily transformers and reactors) in the EHV space has still not seen any recovery, given a continued overcapacity situation, and remains a key concern.

Engineering & Capital Goods - PGCIL’s second HVDC project on fast track; sector update

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