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India Equity Research Reports, IPO and Stock News
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http://content.icicidirect.com/mailimages/ICICIdirect_BGREnergy_EventUpdate.pdf
I t's s p r i n g t i m e ! ! !
BGR Energy (BGR) has emerged as lowest bidder (L1) for NTPC’s 11X660
MW boiler bulk tender order. This would translate into new orders worth
| 6468 crore, which should get booked in this fiscal year itself.
Considering another | 1,500 crore order for turbine-generators (part of
| 3,000 crore bulk tender, won previously) will also be booked this fiscal,
and the standing order book of | 8,200 crore, the total order book would
catapult to approximately | 15,000 crore as on Q4FY12E. This would
imply a very comfortable book to bill ratio of 4.3x (on TTM basis) thereby
increasing revenue visibility for BGR till FY14E/FY15E. We believe this
would lead to a re rating of the stock.
Key conference call highlights …
• The delivery time for the order is 48 months, implying major
revenue booking will be done in FY15 and FY16
• The management has guided for a 12-13% EBITDA margin and 6-
7% PAT margin on the order, with a 40% import component for
the order (including some portions of raw material)
• Advances from NTPC will be 15%, implying a cash flow of | 1,000
crore, which will cushion the stressed working capital cycle
• Commencement schedule for BTG facility is on track with
construction starting in May ‘12 & getting commissioned by 2013
• The facility will entail a total outlay of | 4,000 crore, which will be
funded in a debt equity ratio of 70:30
• Total 100% indigenisation is expected from the third boiler
onwards, barring a few critical components
• The company has a bidding pipeline of | 35,000 crore. The
Rajasthan EPC order, worth close to | 6,000 crore, should get
awarded in Q1FY13
V a l u a t i o n
Incremental order flows to the tune of | 9500 crore in the last few quarters
have ended the dry spell for BGR. With this, the revenue visibility has
certainly become solid. At this point in time, we are not factoring in FY14E
financials. However, we are simultaneously raising our target multiple
from 8x to 12x and valuing the stock on FY13E EPS as confidence on
earnings visibility has drastically improved. At our target price of | 384,
we have rated the stock as HOLD. Steep declines, if any, should be
looked as opportunity to buy the stock
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
http://content.icicidirect.com/mailimages/ICICIdirect_BGREnergy_EventUpdate.pdf
I t's s p r i n g t i m e ! ! !
BGR Energy (BGR) has emerged as lowest bidder (L1) for NTPC’s 11X660
MW boiler bulk tender order. This would translate into new orders worth
| 6468 crore, which should get booked in this fiscal year itself.
Considering another | 1,500 crore order for turbine-generators (part of
| 3,000 crore bulk tender, won previously) will also be booked this fiscal,
and the standing order book of | 8,200 crore, the total order book would
catapult to approximately | 15,000 crore as on Q4FY12E. This would
imply a very comfortable book to bill ratio of 4.3x (on TTM basis) thereby
increasing revenue visibility for BGR till FY14E/FY15E. We believe this
would lead to a re rating of the stock.
Key conference call highlights …
• The delivery time for the order is 48 months, implying major
revenue booking will be done in FY15 and FY16
• The management has guided for a 12-13% EBITDA margin and 6-
7% PAT margin on the order, with a 40% import component for
the order (including some portions of raw material)
• Advances from NTPC will be 15%, implying a cash flow of | 1,000
crore, which will cushion the stressed working capital cycle
• Commencement schedule for BTG facility is on track with
construction starting in May ‘12 & getting commissioned by 2013
• The facility will entail a total outlay of | 4,000 crore, which will be
funded in a debt equity ratio of 70:30
• Total 100% indigenisation is expected from the third boiler
onwards, barring a few critical components
• The company has a bidding pipeline of | 35,000 crore. The
Rajasthan EPC order, worth close to | 6,000 crore, should get
awarded in Q1FY13
V a l u a t i o n
Incremental order flows to the tune of | 9500 crore in the last few quarters
have ended the dry spell for BGR. With this, the revenue visibility has
certainly become solid. At this point in time, we are not factoring in FY14E
financials. However, we are simultaneously raising our target multiple
from 8x to 12x and valuing the stock on FY13E EPS as confidence on
earnings visibility has drastically improved. At our target price of | 384,
we have rated the stock as HOLD. Steep declines, if any, should be
looked as opportunity to buy the stock
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