Accumulate BGR Energy Systems - Q3FY13 Result Update - Kotak

- Revenues of the company for Q3FY13 remained flat YoY but was marginally better than our estimates.

- Operating margins declined during Q3FY13 and stood at 13.7% due to higher proportion of EPC project execution.

- Net profit performance continues to remain impacted by flat growth revenues and increase in interest outgo.

- At current price of Rs235, stock is trading at 10.5x and 10.1x P/E and 6.6x and 7.8x EV/EBITDA on FY13 and FY14 respectively. We tweak our FY13 estimates to factor in delays seen in award of NTPC bulk tender projects and arrive at a revised price target of Rs255 (Rs 274 earlier). We believe that order inflows from the power sector in the BoP and EPC space continue to remain lackluster and it has resulted in lower than expected order inflow for BGR energy. We thus continue to maintain ACCUMULATE recommendation on the stock since we believe that in near term, lack of order inflows may continue to weigh on the stock but performance is likely to improve once its execution ramps up from the NTPC bulk tenders in the medium to long term.

Source : Equity Bulls

Keywords