BGR Energy Systems CMP- Rs.453 Reco- Buy Target price – Rs based on 19xFY11 EPS of Rs.33.5
Business Segment A. Construction Contract Segment- turnkey EPC and BOP - Caters to power and Oil & Gas Sector Business Divisions - Power plant - Captive power plant - Oil and Gas - Environmental Engineering B. Capital Goods Segment - Sells heat exchangers, waste heat recovery units and pressure vessels used in power, oil and gas and petrochemical industries
Revenue Mix – FY05-12P
Revenue break up as on March 31 FY09
Investment Arguments -EPC business emerging as a key growth driver - Order accretion likely to pick up on account of huge power supply demand gap in the country -Oil and gas business division likely to perform better on account of higher order accretion -Agreement with Foster Wheeler would lead to in house manufacturing of boilers - Well poised to face competition
EPC business emerging as a key growth driver BGR Energy focusing on being an end-to-end EPC contractor It secured order worth Rs.31 bln from Tamil Nadu Electricity Board (TNEB) for setting up a 600 MW power plant at Mettur in July 2008 Another order worth Rs.49 bln from Rajasthan Electricity Board (REB) for setting up 2 units of 600 MW power plant at Kalisindh
Order book composition Current order book- Rs crore; over 6xFY09 sales
EPC and BOP contracts
Power supply demand gap will drive order accretion
Rise in demand in the energy industry calls for a efficient distribution network for oil and natural gas transportation Agreement with Foster Wheeler would lead to in house manufacturing of sub critical and super critical boilers This is likely to improve margins going forward
Be cautious to Order book driven by 2-3 major orders The company imports BTG from international suppliers which impacts company’s margins Debt/Equity ratio of 1.3 will result in high interest cost
Income Statement FY2008FY2009FY2010PFY2011PFY2012P Sales OPBDIT Interest Depreciation PAT Sales Growth % Op. Profit Growth % PAT Growth %
Ratios RATIOS FY2008FY2009FY2010PFY2011PFY2012P Current Ratio RONW(%) ROCE(%) OPM (%) NPM(%)