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A t l a s t ! I n f l o ws c o m e b a c k …
The much awaited NTPC bulk tender for 9x800 MW supercritical BTG sets
was finally opened on Wednesday & Thursday. Though unsuccessful in
gaining any boiler order, BGR Energy (BGR) was declared lowest bidder
for the turbine and generator (TG) units. Out of the nine units of 800 MW
ratings, BGR would be allocated order for supply of five sets of the same,
translating into order size of 4,000 MW or | 3600 crore. Remaining 4x800
MW TG sets would go equally to lowest bidder 2 (media reports indicate
L&T as L2 for the TG tender) and Bhel. BGR’s bid at | 0.9 crore/MW seems
to be competitive as the Bharat Forge and Alstom JV has reportedly
bagged the TG sets at | 1.3 crore/MW in the 11X660 MW NTPC tender.
Impact
The management has indicated that 90% of revenues and profitability will
be booked at the parent level while the order book at the parent level will
inch up by | 3600 crore. The management has guided for a 10% PBT
margin at the quoted price. The first set has to be supplied in 34 months
and commissioned in 42 months with subsequent sets at every two
months interval. BGR will provide 40-45% of the requirements in-house
while the main turbine equipment will be imported from Hitachi’s facility
in Japan, which will be routed through the JV between BGR and Hitachi.
Though nothing from this order will be booked in the current year’s
revenue, it has provided sufficient comfort for FY13E/FY14E/FY15E
revenues. The book to bill will ascend to a comfortable 2.3x from the
current 1.6x as of Q1FY12. BGR’s competitive bid of | 0.90 crore/MW can,
to some extent, be attributed to the superior technology and execution
capabilities of its JV partner Hitachi. It is quite evident now that the power
equipment market is getting competitive domestically as new players
have surprised the incumbents in the tender.
V a l u a t i o n
We maintain our earlier price target of | 471 for now as the revenue from
this order will start flowing in from FY14 and FY15. Given the sharp
reaction of the stock price to the news, we believe the stock will wait for
the next set of orders, which will drive the re-rating for the stock.
However, this order has provided the much required visibility on the
financials, going ahead. We maintain our BUY rating on the stock.
Exhibit 1: Major orders
Order Amount Order Details
| 3600 crore Supply of 5x800 MW TG to NTPC
| 445 crore Turnkey contract for main plant electricals for nuclear power plants of NPCIL
| 2168 crore BoP contract for 2x660 MW Supercritical Thermal Power Project
Source: Company, ICICIdirect.com Researc
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
A t l a s t ! I n f l o ws c o m e b a c k …
The much awaited NTPC bulk tender for 9x800 MW supercritical BTG sets
was finally opened on Wednesday & Thursday. Though unsuccessful in
gaining any boiler order, BGR Energy (BGR) was declared lowest bidder
for the turbine and generator (TG) units. Out of the nine units of 800 MW
ratings, BGR would be allocated order for supply of five sets of the same,
translating into order size of 4,000 MW or | 3600 crore. Remaining 4x800
MW TG sets would go equally to lowest bidder 2 (media reports indicate
L&T as L2 for the TG tender) and Bhel. BGR’s bid at | 0.9 crore/MW seems
to be competitive as the Bharat Forge and Alstom JV has reportedly
bagged the TG sets at | 1.3 crore/MW in the 11X660 MW NTPC tender.
Impact
The management has indicated that 90% of revenues and profitability will
be booked at the parent level while the order book at the parent level will
inch up by | 3600 crore. The management has guided for a 10% PBT
margin at the quoted price. The first set has to be supplied in 34 months
and commissioned in 42 months with subsequent sets at every two
months interval. BGR will provide 40-45% of the requirements in-house
while the main turbine equipment will be imported from Hitachi’s facility
in Japan, which will be routed through the JV between BGR and Hitachi.
Though nothing from this order will be booked in the current year’s
revenue, it has provided sufficient comfort for FY13E/FY14E/FY15E
revenues. The book to bill will ascend to a comfortable 2.3x from the
current 1.6x as of Q1FY12. BGR’s competitive bid of | 0.90 crore/MW can,
to some extent, be attributed to the superior technology and execution
capabilities of its JV partner Hitachi. It is quite evident now that the power
equipment market is getting competitive domestically as new players
have surprised the incumbents in the tender.
V a l u a t i o n
We maintain our earlier price target of | 471 for now as the revenue from
this order will start flowing in from FY14 and FY15. Given the sharp
reaction of the stock price to the news, we believe the stock will wait for
the next set of orders, which will drive the re-rating for the stock.
However, this order has provided the much required visibility on the
financials, going ahead. We maintain our BUY rating on the stock.
Exhibit 1: Major orders
Order Amount Order Details
| 3600 crore Supply of 5x800 MW TG to NTPC
| 445 crore Turnkey contract for main plant electricals for nuclear power plants of NPCIL
| 2168 crore BoP contract for 2x660 MW Supercritical Thermal Power Project
Source: Company, ICICIdirect.com Researc
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