Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
We met the management of Kalpataru Power (KPP) and returned
convinced that the pain in T&D is unlikely to ease in a hurry. The
execution has been affected by Row (Right of Way) and labour issues to
an extent. There was a clear denial of the merger between KPP and JMC
in the near term. We continue to remain cautious on KPP and maintain
‘HOLD’ with a target price of INR109.
T&D ordering healthy, execution, profitability remain hurdles
Traction in transmission tower ordering remains healthy with an expected double digit
growth in new orders in FY12E of which PGCIL accounts for almost 50%. The
management has also pointed to a healthy ordering traction in key overseas markets
like US, MENA etc. However, the execution in domestic market is expected to remain
weak owing to land issues and deferrals in generation projects. Also, the management
hinted at competition in the tower EPC space & pipeline business to be a key concern
even as it guided for stable operating margins for FY12E and FY13E. The management
also made clear its intentions to enter Railways and water including the waste water
treatment business via inorganic route in the near to medium term.
JMC Projects on a strong growth patch; may need equity infusion
With a JMC order book of INR50bn (~75% of which has PV clause/materials built in),
the company is not rushing in to bag new orders given the higher competitive intensity.
Across its four BOOT projects and four new incremental projects, the company is
looking at an IRR threshold of ~16%. With a portfolio of BOOT projects worth `INR25bn
in roads, we believe that JMC will require an incremental funding of >~INR5bn towards
an equity funding for these projects.
Outlook and valuations: Cautious; maintain ‘HOLD’
Delay in execution is likely to hurt revenue growth during H2FY12. Increase in
competitive intensity is likely to keep margins under pressure over the long run. We
continue our cautious stance on the company and maintain ‘HOLD/ Sector Performer’
recommendation/ rating with a target price of INR109.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
We met the management of Kalpataru Power (KPP) and returned
convinced that the pain in T&D is unlikely to ease in a hurry. The
execution has been affected by Row (Right of Way) and labour issues to
an extent. There was a clear denial of the merger between KPP and JMC
in the near term. We continue to remain cautious on KPP and maintain
‘HOLD’ with a target price of INR109.
T&D ordering healthy, execution, profitability remain hurdles
Traction in transmission tower ordering remains healthy with an expected double digit
growth in new orders in FY12E of which PGCIL accounts for almost 50%. The
management has also pointed to a healthy ordering traction in key overseas markets
like US, MENA etc. However, the execution in domestic market is expected to remain
weak owing to land issues and deferrals in generation projects. Also, the management
hinted at competition in the tower EPC space & pipeline business to be a key concern
even as it guided for stable operating margins for FY12E and FY13E. The management
also made clear its intentions to enter Railways and water including the waste water
treatment business via inorganic route in the near to medium term.
JMC Projects on a strong growth patch; may need equity infusion
With a JMC order book of INR50bn (~75% of which has PV clause/materials built in),
the company is not rushing in to bag new orders given the higher competitive intensity.
Across its four BOOT projects and four new incremental projects, the company is
looking at an IRR threshold of ~16%. With a portfolio of BOOT projects worth `INR25bn
in roads, we believe that JMC will require an incremental funding of >~INR5bn towards
an equity funding for these projects.
Outlook and valuations: Cautious; maintain ‘HOLD’
Delay in execution is likely to hurt revenue growth during H2FY12. Increase in
competitive intensity is likely to keep margins under pressure over the long run. We
continue our cautious stance on the company and maintain ‘HOLD/ Sector Performer’
recommendation/ rating with a target price of INR109.
No comments:
Post a Comment