Company Report | Q4FY11 Result Update

LONG TERM INVESTMENT CALL

30 May 2011 Hold

Industry Power Project Execution remains on track, Order inflows disappoint

CMP (INR) 477
Target (INR) 528 BGR Energy Systems Ltd (BGRL) reported revenue of INR 14.6 bn for
Upside / Downside (%) 10 Q4FY11, down 12% on YoY basis. Revenue for the year was at INR 47.6
52 week High/Low (INR) 950/401 bn, up 55% on YoY basis. Strong revenue growth for the year was driven
Market Cap (INR Mn) 34,421 primarily by on time execution of the Kalisindh (70% complete) and
3M Avg. Volumes (000’s) 678.82 Mettur (80% complete) projects.
P/E (FY12e) 9.9
EBITDA for the quarter was INR 1,674 mn, down 4% on YoY basis.
Shareholding Pattern (%) EBITDA margin for the quarter was 11.45%, which saw an improvement
Others
of 848 bps. EBITDA for the year was INR 5.5 bn, up 58%, YoY. EBITDA
DII
5% 12% margin for the year saw an improvement of 215 bps to 11.57%.
FII
2%
PAT for the quarter was INR 984 mn, down 9%, YoY. PAT margin
improved by 311 bps to 6.73%. PAT for the year was INR 3.2 bn, up 61%,
YoY. PAT margin saw an improvement of 413 bps to 6.81%.

Promoters
81%
Order backlog stands at INR 79.7 bn (down 21.8%, YoY). Subdued order
inflow (INR 29 bn) in FY11 has resulted in depletion of company’s order
book (Order book at the end of FY10 was INR 102 bn). The current order
book provides very little earnings visibility for FY13 & FY14.
Stock Performance

850 BGRL has given a revenue growth guidance of 15% for FY12 and expects
750
the order inflows to improve significantly in Q2FY12 & Q3FY12. The
management cited that the company has already submitted bids to the
650
tune of about INR 200 bn across the EPC, BTG and BoP segments.
550

450
The company has already acquired land for its BTG venture with Hitachi
350 and will achieve financial closure in coming three months. BGRL has
Dec
Aug
Jul

Sep
Jun

Jan
Nov
May

Oct

Feb

Mar

Apr

invested INR 1.5 bn in FY11 and intends to further invest INR 2.5 bn in
BGRL NSE Nifty
FY12E. The total project cost for the boiler & turbine generators unit
stands at INR 44 bn.
Performance (%)
1 Month 3 Months 1 Year
BGR -13.0 11.6 -19.5 Outlook & Valuation
NIFTY -5.3 -0.8 8.1

(INR Mn) Issues related to environmental clearances and coal linkage which could
Particulars Actual Estimates delay the award process could potentially strain revenue growth and
visibility in FY13E. Furthermore, increased competition in the BoP as well
Total Income 14616 13656
as BTG space may have a negative impact on margins. Key upside
EBIDTA 1674 1578
triggers for the stock would be a positive outcome on the Rajasthan
Reported PAT 984 897
project as well as the NTPC bulk tender decision in BGRL’s favor.
* Source: Bloomberg, Unicon Research
Though the stock has corrected sharply, sustained order inflows in FY12
could re-rate the stock. We revise our rating from Buy to Hold
considering weak order inflows and high competition in the power BoP
& BTG space. We downgrade our FY12E EPS to INR 48. At CMP the
stock trades at 9.9x our earnings estimate. Hold for a target of INR 528.

Wealth Research, Unicon Financial Intermediaries. Pvt Ltd.

Email: wealthresearch@unicon.in
Financials
(INR Mn)
Q4FY11 Q4FY10 YoY FY11 FY10 YoY
Net Sales / Income from Operations 14616 16598 -12% 47608 30738 55%
Expenditure 12943 14846 -13% 42101 27257 54%
EBITDA 1674 1752 -4% 5507 3480 58%
EBITDA margin (%) 11.45% 10.56% 848 bps 11.57% 11.32% 215 bps
Depreciation 70 31 129% 168 98 72%
Other Income 17 39 -56% 86 202 -57%
Interest 183 118 55% 605 538 12%
PBT 1438 1642 -12% 4820 3047 58%
Tax expense 454 559 -19% 1578 1037 52%
PAT 984 1083 -9% 3242 2010 61%
PAT margin (%) 6.73% 6.53% 311 bps 6.81% 6.54% 413 bps
Earnings per Share (EPS) 13.63 15.04 -9% 44.97 27.92 61%

Segment Revenue Q4FY11 Q4FY10 YoY FY11 FY10 YoY

Capital Goods 1213 824 47% 2661 1682 58%
Construction and EPC Contracts 13359 15747 -15% 44814 29010 54%
Total 14573 16571 -12% 47475 30692 55%
Source: Company, Unicon Research

Wealth Research, Unicon Financial Intermediaries. Pvt Ltd.

Email: wealthresearch@unicon.in
 Unicon Investment Ranking Methodology

Rating Buy Accumulate Hold Reduce Sell

Return Range >= 20% 10% to 20% -10% to 10% -10% to -20% <= -20%

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Wealth Research, Unicon Financial Intermediaries. Pvt Ltd.

Email: wealthresearch@unicon.in