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BHEL
Bharat Heavy Electricals Ltd (BHEL) is a premier power generation equipment manufacturer and a leading EPC
company. It has emerged as the prime beneficiary of the four-fold increase in the investments in the power
sector in India.
BHEL currently has orders worth Rs164,130 crore on hand, which provides revenue coverage for the next
three to four years. We believe the order inflow momentum would remain strong for the company. However,
the key challenge for BHEL would be the timely execution of projects.
The company is confident of bagging orders for at least five boilers and four turbines as far as the bulk
tendering by NTPC is concerned. The order finalisation for the same was expected in Q4FY11, but seems it
would be deferred to Q1FY12.
The company has already expanded its capacity to 15GW in FY11. Also, the project to expand the capacity to
20GW by FY12 is being executed on a fast track. In our view, the stabilisation of the new capacity coupled with
the de-bottlenecking of the supply chain would aid order execution and sustain robust growth in BHEL’s
revenues in the coming years. We estimate the profits to grow at a CAGR of 19.2% over FY10-13.
The near-term positive trigger in the stock is the order inflow in the power equipment business. The current
valuation at 15.2x its FY12E earnings are also looking attractive We have, therefore, included BHEL amongst our
Top Picks.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
BHEL
Bharat Heavy Electricals Ltd (BHEL) is a premier power generation equipment manufacturer and a leading EPC
company. It has emerged as the prime beneficiary of the four-fold increase in the investments in the power
sector in India.
BHEL currently has orders worth Rs164,130 crore on hand, which provides revenue coverage for the next
three to four years. We believe the order inflow momentum would remain strong for the company. However,
the key challenge for BHEL would be the timely execution of projects.
The company is confident of bagging orders for at least five boilers and four turbines as far as the bulk
tendering by NTPC is concerned. The order finalisation for the same was expected in Q4FY11, but seems it
would be deferred to Q1FY12.
The company has already expanded its capacity to 15GW in FY11. Also, the project to expand the capacity to
20GW by FY12 is being executed on a fast track. In our view, the stabilisation of the new capacity coupled with
the de-bottlenecking of the supply chain would aid order execution and sustain robust growth in BHEL’s
revenues in the coming years. We estimate the profits to grow at a CAGR of 19.2% over FY10-13.
The near-term positive trigger in the stock is the order inflow in the power equipment business. The current
valuation at 15.2x its FY12E earnings are also looking attractive We have, therefore, included BHEL amongst our
Top Picks.
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