BGR Energy Systems – Momentum missing, re-rating hinges on order wins::Emkay

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BGR Energy Systems - Not Rated – Market Cap Rs36 bn – Momentum missing, re-rating hinges on order wins and success in BTG space

We met the management of BGR Energy in Chennai. We met Director Mr. Swaminathan and Investor Relations Mr. Balasubramanyam. The key takeaways from our discussion with the management are as under.

Takeaways on the Industry/Business

n    Order finalizations remain weak, cannot forecast the timing of pick-up in order inflows

n    Expect order finalizations in few outstanding orders – Rajasthan SEB order of Rs120 bn and few NTPC package orders

n    Large BOP orders totalling Rs200 bn would come for finalization in 2HFY12, also expect standalone packages to see finalization in 2HFY12

n    Expect margins to be relatively stable on new order wins – despite rise in competition and lull in finalizations for last 2 quarters

n    Expect 11X660 MW tender of NTPC to see light in July 2011- as Supreme Court hearing is scheduled on 27th July 2011

n    Whereas, 8X 880 MW BTG tender have no confusion- there are 5 qualified bidders including BGR Energy and would see closure on financial and price bids in Q3FY12 – there remains no ambiguity on this NTPC tender