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(%)