Update - Power equipment :: ShareKhan PDF link

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� �

SECTOR UPDATE Power equipment      NTPC order - BGR shines, BHEL gets fair share, L&T misses yet again Event: Bids open for NTPC's bulk order; BGR emerges as lowest bidder  BGR Energy Systems (BGR) has emerged as the lowest bidder (L1) for the supply of supercritical boilers and turbine-generators (TG) respectively for the 7260MW (11x 660MW) National Thermal Power Corporation (NTPC) power projects. It is likely to get 7 units of boiler orders worth Rs6,500 crore at a realisation of Rs1.4 crore/MW. Here, Bharat Heavy Electricals Ltd (BHEL) is likely to get Rs3,700 crore worth of orders due to favourable NTPC tendering specifications, provided it matches the L1 quotations.  BHEL (CMP Rs299, Hold) - to get fair share of order  Power sector reforms and possible levy of import duty to improve competitive environment could result in re-rating of multiples. The recent few developments/reforms in the power sector seem to be working in favour of BHEL after a spate of bad news in CY2011. Price target revised to Rs328: The above positive developments and resulting containment in overseas competition would augur well for the company. Hence we are slightly increasing the target multiple to 12x (from the earlier 10x). Our revised price target stands at Rs328 (roll-over of the target multiple on average of FY2013 and FY2014 earnings estimate). We maintain our Hold rating on the stock. L&T (CMP Rs1,278, Buy) yet to open its account with NTPC L&T appears to have lost out to BGR and BHEL in its price bid in the super-critical bulk tender order from NTPC.  We feel that this was in accordance with the company's focus on the sustenance of healthy margins. The company has been earlier disqualified in the first round of 11x660MW equipment bid on technical ground. In the 9x800MW segment the company emerged as L2; the order was given to the joint venture of JSW Energy with Toshiba.  L&T currently has a well-diversified order book of Rs145,768 crore in M9FY2012, of which only 29% is contributed by the power sector. Hence, the shortfall in this sector could partly be compensated by contributions from other sectors. At the current market price the stock is trading at 11.9x its FY2014 consolidated earnings estimate. We maintain our Buy rating on the stock on its diversified business exposure and attractive valuations.

---

Click here to read report: Investor's Eye