Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Bharat Heavy Electricals Limited
F PO update: government shortlists banks
Event: government shortlists 17 bankers for BHEL’s follow-on public offer
According to media reports, the government has shortlisted 17 bankers for the
initial round of presentation and discussion to manage Bharat Heavy Electricals’
(BHEL) follow-on public offer (FPO). If we go by past trends, the government
could decide to appoint five to eight banks (from the 17) for the management of the
share sale. According to reports, the central government might raise Rs47bn and
reduce its stake by 5% to 62.72%.
Impact: the FPO may be completed in Q3 FY12
The company’s board announced the FPO during the FY11 results release in May
2011. Hence, the process has so far moved rapidly, and if there are no significant
procedural delays from the government, the share sale could be completed in Q3
FY12 itself. There has not been any indication yet by the government on the
discount it may offer versus the current market price.
Action: fundamentally attractive; FPO remains an overhang in near-term
We believe the FPO will remain an overhang in the near-term as investors may
believe: 1) the price band to be fixed for the FPO will be determined by the current
share price; and 2) the government may offer a discount and the stock will be
available at a lower price later during the FPO. Fundamentally, we remain positive
on the stock. We maintain BHEL as our top pick in the Indian capital goods space,
though the FPO may remain an overhang in the near-term.
Valuation: our top pick in the Indian capital goods space
We base our Rs2,750.00 price target on a DCF valuation. We assume a WACC of
11.9%, a medium-term growth rate of 15%, and long-term growth. BHEL is our
top pick in the capital goods space and we reiterate our Buy rating on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Bharat Heavy Electricals Limited
F PO update: government shortlists banks
Event: government shortlists 17 bankers for BHEL’s follow-on public offer
According to media reports, the government has shortlisted 17 bankers for the
initial round of presentation and discussion to manage Bharat Heavy Electricals’
(BHEL) follow-on public offer (FPO). If we go by past trends, the government
could decide to appoint five to eight banks (from the 17) for the management of the
share sale. According to reports, the central government might raise Rs47bn and
reduce its stake by 5% to 62.72%.
Impact: the FPO may be completed in Q3 FY12
The company’s board announced the FPO during the FY11 results release in May
2011. Hence, the process has so far moved rapidly, and if there are no significant
procedural delays from the government, the share sale could be completed in Q3
FY12 itself. There has not been any indication yet by the government on the
discount it may offer versus the current market price.
Action: fundamentally attractive; FPO remains an overhang in near-term
We believe the FPO will remain an overhang in the near-term as investors may
believe: 1) the price band to be fixed for the FPO will be determined by the current
share price; and 2) the government may offer a discount and the stock will be
available at a lower price later during the FPO. Fundamentally, we remain positive
on the stock. We maintain BHEL as our top pick in the Indian capital goods space,
though the FPO may remain an overhang in the near-term.
Valuation: our top pick in the Indian capital goods space
We base our Rs2,750.00 price target on a DCF valuation. We assume a WACC of
11.9%, a medium-term growth rate of 15%, and long-term growth. BHEL is our
top pick in the capital goods space and we reiterate our Buy rating on the stock.
Bharat Heavy Electricals Limited
Bharat Heavy Electricals (BHEL) focuses on the Indian power equipment
business. Its main customers are National Thermal Power Corporation (NTPC)
and state electricity boards that account for over 70% of revenue. BHEL also
services the power transmission, captive power plant, industrial equipment, and
the transport segments. It is 68%-owned by the Government of India.
Statement of Risk
The key risks for BHEL remain execution, delivery, raw material costs, and
order inflows.
No comments:
Post a Comment