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In this report, we study a mine of comprehensive data on (A) month-wise
and project-wise execution status of PGCIL and State Transcos vs. target,
(B) investment approvals for transmission projects, given by PGCIL's board
since 2008, (C) month-wise list of contracts awarded by PGCIL over the last
six quarters. The conclusions are listed below:-
Conclusion #1: As of Aug-11, PGCIL was tracking well ahead of CoD
target for transmission lines & transformation capacity addition. After
lagging CEA target in 1Q, SEBs too have registered healthy execution in
2Q and were also tracking slightly ahead of CEA target in Aug-11.
Conclusion #2: Over Jul-Aug-2011 (2months) PGCIL commissioned
1887ckm of transmission lines or ~26.3% of FY12 target.
Conclusion #3: In Sep-q PGCIL's board gave investment approval for
Rs78bn of projects vs. Rs20bn in Jun-q of FY12.
Conclusion #4: Based on CoD schedule of projects and PGCIL's
superior execution track record so far, we conclude that there is likely
to be a sharp pick up in 'capitalization' (or addition to gross block) in
FY13 over FY12. Proposed project-wise CoD targets indicate a blue sky
capitalization scenario of ~Rs268bn in FY13 vs. FY12 target of ~Rs95-
100bn.
Conclusion #5: PGCIL has awarded Rs222bn contracts over the past 6
quarters and Rs35bn in Sep-q (vs. Rs3.2bn in Jun-q). Ordering activity has
seen a pick-up in last 3 months.
Conclusion #6: Excluding the Rs53.2bn HVDC contract awarded to ABB
Group (ABB India’s share is ~Rs6.2bn) in Mar-11 from calculations, ~74%
of remaining awards by PGCIL over the last 6 quarters were for mainly for
tower packages (Rs77bn), conductor packages (Rs36bn) and insulators
(Rs6bn). Substation equipment suppliers were competing for just ~44bn of
PGCIL contracts over this period. This portends the intensity of
competition in this sector.
Conclusion #7: Ex-ABB HVDC order, 9/10 top PGCIL contractors by order
win magnitude (over last 6 quarters) were transmission line EPC contractors,
tower or conductor manufacturers. Siemens Ltd. was the sole S/S equipment
suppliers with cumulative order wins of Rs7.1bn.
Our investment view. Buy PGCIL (PWGR IN) and Siemens (SIEM IN).
Sell Crompton Greaves (CRG IN).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
In this report, we study a mine of comprehensive data on (A) month-wise
and project-wise execution status of PGCIL and State Transcos vs. target,
(B) investment approvals for transmission projects, given by PGCIL's board
since 2008, (C) month-wise list of contracts awarded by PGCIL over the last
six quarters. The conclusions are listed below:-
Conclusion #1: As of Aug-11, PGCIL was tracking well ahead of CoD
target for transmission lines & transformation capacity addition. After
lagging CEA target in 1Q, SEBs too have registered healthy execution in
2Q and were also tracking slightly ahead of CEA target in Aug-11.
Conclusion #2: Over Jul-Aug-2011 (2months) PGCIL commissioned
1887ckm of transmission lines or ~26.3% of FY12 target.
Conclusion #3: In Sep-q PGCIL's board gave investment approval for
Rs78bn of projects vs. Rs20bn in Jun-q of FY12.
Conclusion #4: Based on CoD schedule of projects and PGCIL's
superior execution track record so far, we conclude that there is likely
to be a sharp pick up in 'capitalization' (or addition to gross block) in
FY13 over FY12. Proposed project-wise CoD targets indicate a blue sky
capitalization scenario of ~Rs268bn in FY13 vs. FY12 target of ~Rs95-
100bn.
Conclusion #5: PGCIL has awarded Rs222bn contracts over the past 6
quarters and Rs35bn in Sep-q (vs. Rs3.2bn in Jun-q). Ordering activity has
seen a pick-up in last 3 months.
Conclusion #6: Excluding the Rs53.2bn HVDC contract awarded to ABB
Group (ABB India’s share is ~Rs6.2bn) in Mar-11 from calculations, ~74%
of remaining awards by PGCIL over the last 6 quarters were for mainly for
tower packages (Rs77bn), conductor packages (Rs36bn) and insulators
(Rs6bn). Substation equipment suppliers were competing for just ~44bn of
PGCIL contracts over this period. This portends the intensity of
competition in this sector.
Conclusion #7: Ex-ABB HVDC order, 9/10 top PGCIL contractors by order
win magnitude (over last 6 quarters) were transmission line EPC contractors,
tower or conductor manufacturers. Siemens Ltd. was the sole S/S equipment
suppliers with cumulative order wins of Rs7.1bn.
Our investment view. Buy PGCIL (PWGR IN) and Siemens (SIEM IN).
Sell Crompton Greaves (CRG IN).
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