BGR Energy Systems - Motilal Oswal

BGR ENERGY 3QFY11: Above estimates; Execution on strong footing; New orders will drive earnings

BGR Energy reported 3QFY11 revenues of Rs12b (up 97% YoY) ahead of our estimates of Rs10b (up 60% YoY), while PAT stood at Rs876m (up 108% YoY).

The company is at an advanced stage of execution of two power projects: (1) 1,200 MW in Rajasthan and (2) 600MW in Tamil Nadu.

EBITDA margin in 3QFY11 stood at 11.8%, up 60bp YoY. The company has been able to maintain EBITDA margins in 11.5-12% range in FY11.

BGR has debt of Rs14.5b and cash of Rs8.5b. Debt includes low-cost buyers' credit of around Rs7b @ LIBOR + 1.25%.

The current order backlog stands at Rs93b with a BTB of 2.4x TTM.

We expect BGR to record a revenue and PAT CAGR of 23% and 19% through FY11-13E with margins in the range of 11.5 - 12%.We maintain Buy with a revised price target of Rs784, based on 16x FY12E earnings (earlier Rs954, 18x FY12 EPS). We have lowered target PE in line with reduced earnings growth expectation. Success in forthcoming tenders can re-rate the stock meaningfully.

Source : Equity Bulls

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