India Industrials 9 *800MW bulk tender order: good pricing 􀂄 UBS

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India Industrials
9 *800MW bulk tender order: good pricing
􀂄 Doosan and BGR are the lowest bidders in boilers and TG respectively
As per media reports, NTPC has opened the bids for the 9*800MW bulk tender for
turbine-generator (TG) sets and boilers. According to media reports, Doosan was
the lowest bidder for boilers (at Rs16m/MW) and will be awarded five units of
boilers. Media reports indicate the JV between BGR Energy Systems and Hitachi
(BGR-Hitachi) was the lowest bidder for TG (at Rs9m/MW) and will be awarded
five units of TG sets.
􀂄 BHEL will reportedly get four boiler units and two TG units
Media reports indicate Bharat Heavy Electricals (BHEL) will have to match the
lowest bid price and will get orders for four units of boilers and two units of TG.
The bulk tender arrangement is such that there will be two winners in boilers (five
units for the lowest bidder and four for BHEL) and three in TG (five for the lowest
bidder and two units each for the second lowest bidder and BHEL). In TG, the
second lowest bidder was Toshiba JSW Turbine and Generator, according to media
reports.
􀂄 The pricing seems reasonable, especially for boilers
The pricing seems reasonable at Rs16m/MW for boilers and Rs9m/MW for TG. It
is competitive but not aggressive, in our view. From BHEL’s perspective, the total
order could be Rs65bn. We believe that even the new entrants in this space
(Doosan) have bid rationally. Overall, we believe an order win of four boilers units
at a good price would be a clear positive for BHEL.
􀂄 BHEL is our key pick in the Indian capital goods space
BHEL (Buy rating and DCF-based price target of Rs2,750) remains our top pick in
the Indian capital goods space.