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Research
BGR Energy Systems - 1QFY2013 Result Update - Angel Broking
Posted On : 2012-08-08 19:56:32( TIMEZONE : IST )
BGR Energy (BGR) reported a dismal set of numbers for 1QFY2013. The company's top-line for the quarter de-grew, leading to a downbeat earnings growth. The order backlog at the end of 1QFY2013 stood at ~Rs.15,000cr (including L1 orders) as NTPC bulk order were recognized in the order book. According to the management, 11,000MW of orders will be targeted during the year of which a majority will be from the government. The management has guided for a revenue of Rs.3,750cr with EBITDA margins at ~11-12% for FY2013. We reduce our revenue expectations by 12.5% and 5.7% for FY2013 and FY2014 respectively. However we maintain our EBITDA margin estimates at 11%. Our EPS estimates are 16.6% and 11.1% below consensus EPS estimates for FY2013E and FY2014E. We maintain our Neutral view on the stock.
Execution decelerates, margin expands: The company's top-line declined by 16.8% yoy to Rs.611cr (Rs.731cr), and came 27.6% lower than our estimate of Rs.844cr. The construction and EPC segment declined by 15.5% yoy to Rs.569cr (Rs.673cr), with the capital goods segment declining by 27.2%. The EBITDAM expanded to 14.4% from 13.1% yoy. According to the management, the margin expansion was due to higher revenue contribution from the BOP projects rather than EPC. The interest cost jumped by 90% to Rs.34cr, due to working capital borrowings, leading to a decline in the PAT by 33% yoy. The PAT came in at Rs.34cr, ie higher than our estimate of Rs.42.5cr.
Outlook and valuation: BGR's working capital has seen a deterioration over the past few quarters, mainly due to high receivables. In our view, tight liquidity is likely to transmit negatively on BGR's books. At the current market price, the stock is trading at a PE multiple of 9.6x on our FY2014E EPS estimates, which we believe is reasonable amidst the structural issues (slowdown of order inflow in BTG space and high leverage) being faced by the company. Hence, we maintain our Neutral view on the stock.
