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Bgr energy ru4 qfy2010-010610
1. 4QFY2010 Result Update I Capital Goods
June 1, 2010
BGR Energy Systems BUY
CMP Rs635
Performance Highlights Target Price Rs722
BGR Energy Systems reported a very impressive 4QFY2010 performance, with Investment Period 12 Months
a 130.7% and 130.6% yoy growth in top and bottom-line, respectively, which
handsomely beat the street estimates. During FY2010-12E, we expect the Stock Info
company to register a top-line and bottom-line CAGR of 36.7% and 31.2%,
Sector Capital Goods
respectively. At the current price, the stock is quoting at 16.4x and at 13.2x its
FY2011E and FY2012E EPS, respectively, which we believe is attractive. We Market Cap (Rs cr) 4,569
maintain our Buy recommendation on the stock.
Beta 0.9
Impressive all-round performance: BGR posted a robust top-line growth of 52 WK High / Low 646/257
130.7% yoy to Rs1,657cr (Rs718cr) for 4QFY2010 on the back of strong
execution of the healthy order book. Notably, both the EPC projects (Mettur Avg. Daily Volume 80,433
and Jhalawar) have been progressing well and are on schedule. For the full Face Value (Rs) 10
year FY2010, top-line grew 59.7% yoy to Rs3,069cr (Rs1,922cr).
BSE Sensex 16,572
On the operating front, the company reported a compression in EBITDA Nifty 4,970
Margin by 105bp to 10.4% (11.5%). This was primarily on the back of higher
raw material costs, which increased by 245bp to 83.4% (81.0%) of net sales, Reuters Code BGRE.BO
on account of higher mix of revenues from the EPC contracts. For the full year
Bloomberg Code BGRL@IN
FY2010, however operating margins expanded by 37bp to 11.2%. Bottom-line
grew by 130.6% yoy to Rs108cr (Rs47cr) for the quarter. For the full year Shareholding Pattern (%)
FY2010, net profit grew 74.7% yoy to Rs201cr (Rs115cr).
Promoters 81.3
Outlook and Valuation MF/Banks/Indian FIs 8.1
FII/NRIs/OCBs 5.9
BGR Energy has taken several 'bigger' leaps over the years, from being a mere
manufacturer of a few Balance of Plant (BoP) components to executing Turnkey Indian Public 4.7
BoP projects, and now gradually executing full-fledged EPC contracts. In
addition, we believe that the potential JV with Hitachi would augur well for the Abs. (%) 3m 1yr 3yr*
company in the long run. The company has a healthy order book of Sensex 0.9 11.7 (18.5)
Rs10,230cr, providing good revenue visibility. We maintain our Buy
recommendation on the stock with a Target Price of Rs722. BGR Energy 29.8 82.9 (29.6)
Note: * Since listed as on Jan 3, 2008
Key Financials (Consolidated)
Y/E March (Rs cr) FY2009 FY2010 FY2011E FY2012E
Net Sales 1,930 3,073 4,444 5,746
% chg 27.0 59.2 44.6 29.3
Adj. Net Profit 115 201 279 346
% chg 32.2 74.4 38.5 24.2
EBITDA (%) 10.8 11.2 11.0 10.9
EPS (Rs) 16.0 28.0 38.7 48.1
P/E (x) 39.6 22.7 16.4 13.2
P/BV (x) 8.1 6.5 5.1 3.9
RoE (%) 22.2 31.7 34.7 33.6
RoCE (%) 14.6 16.9 18.2 17.7
Puneet Bambha
EV/Sales (x) 2.4 1.5 1.1 0.9
Tel: 022 – 4040 3800 Ext: 347
EV/EBITDA (x) 22.3 13.0 9.9 8.0 E-mail: puneet.bambha@angeltrade.com
Source: Company, Angel Research
1
Please refer to important disclosures at the end of this report Sebi Registration No: INB 010996539
2. BGR Energy I 4QFY2010 Result Update
Exhibit 1: 4QFY210 Performance
Y/E March (Rs cr) 4QFY10 4QFY09 % chg FY10 FY09 % chg
Net Sales 1,657 718 130.7 3,069 1,922 59.7
Raw Material 1,382 581 137.7 2,487 1,579 57.4
(% of Net Sales) 83.4 81.0 81.0 82.2
Employee Cost 48 19 149.3 125 73 70.6
(% of Net Sales) 2.9 2.7 4.1 3.8
Other Expenses 55 35 55.3 114 62 85.8
(% of Net Sales) 3.3 4.9 3.7 3.2
Total Expenditure 1,485 636 133.5 2,726 1,714 59.0
EBITDA 173 82 109.5 344 208 65.1
EBITDA (%) 10.4 11.5 11.2 10.8
Interest 12 18 (33.4) 54 58 (7.2)
Depreciation 3 2 34.1 10 7 39.9
Other Income 7 8 (21.3) 25 32 (21.6)
Profit before Tax 164 71 132.3 305 175 74.4
(% of Net Sales) 9.9 9.8 9.9 9.1
Total Tax 56 24 135.7 104 60 74.0
(% of PBT) 34.0 33.6 34.0 34.1
Reported PAT 108 47 130.6 201 115 74.7
(% of Net Sales) 6.5 6.5 6.5 6.0
Source: Company, Angel Research
Across Segments
During the quarter, the Construction and EPC Contracts Division was the key driver,
registering robust 154.7% yoy growth in top-line to Rs1,575cr (Rs618cr). On the
other hand, the Capital Goods Segment continues to face pressure. Margins of the
Construction and EPC Division however declined 225bp to 10.1% (12.4%) during
the quarter.
Exhibit 2: Segment-wise Performance
Y/E March (Rs cr) 4QFY10 4QFY09 % chg FY10 FY09 % chg
Revenue
Capital Goods 82 100 (17.7) 168 191 (12.1)
Construction and EPC 1,575 618 154.7 2,901 1,731 67.6
Total Revenues 1,657 718 130.7 3,069 1,922 59.7
EBIT
Capital Goods 13 4 245.5 21 16 27.4
Construction and EPC 159 76 108.5 318 190 67.2
Total EBIT 172 80 114.8 338 206 64.1
Revenue Mix (%)
Capital Goods 5.0 13.9 5.5 10.0
Construction and EPC 95.0 86.1 94.5 90.0
EBIT Margin (%)
Capital Goods 15.6 3.7 12.3 8.5
Construction and EPC 10.1 12.4 10.9 11.0
Source: Company, Angel Research
June 1, 2010 2
3. BGR Energy I 4QFY2010 Result Update
Order Flows
The order backlog for the quarter increased 7.4% yoy to Rs10,230cr. The Power
Projects Division constituted 92.5%, while the Oil & Gas Division contributed 4.4% of
the backlog. The company sees a strong bidding pipeline and expects order booking
to gain momentum during the current financial year.
Exhibit 3: Quarterly Order Backlog
14,000
12,179
12,000 11,609
10,881
10,230
10,000 9,523
8,000
(Rs cr)
6,000
4,000
2,000
0
4Q09 1Q10 2Q10 3Q10 4Q10
Source: Company, Angel Research
Outlook and Valuation
BGR Energy has taken several 'bigger' leaps over the years, from being a mere
manufacturer of a few Balance of Plant (BoP) components to executing Turnkey BoP
projects, and now gradually executing full-fledged EPC contracts. In addition, we
believe that the potential JV with Hitachi would augur well for the company in the
long run.
The company has a healthy order book of Rs10,230cr providing good revenue
visibility. During FY2010-12E, we expect the company to register a top-line and
bottom-line CAGR of 36.7% and 31.2%, respectively. At the current price, the stock
is quoting at 16.4x and at 13.2x its FY2011E and FY2012E EPS, respectively, which
we believe is attractive. We maintain our Buy recommendation with a Target Price
of Rs722.
Exhibit 4: One-year Forward Rolling P/E Band
1,200
25x
1,000
800 20x
Share Price (Rs)
15x
600
400 10x
200 5x
0
Jan-08
Apr-08
Jul-08
Jan-09
Apr-09
Jul-09
Jan-10
Apr-10
Oct-08
Oct-09
Source: C-line, Angel Research
June 1, 2010 3
4. BGR Energy I 4QFY2010 Result Update
Profit & Loss Statement (Consolidated) (Rs cr)
Y/E March FY2007* FY2008 FY2009 FY2010E FY2011E FY2012E
Net Sales 786.8 1,520.5 1,930.3 3,073.4 4,444.0 5,745.8
Other operating income - - - - - -
Total operating income 786.8 1,520.5 1,930.3 3,073.4 4,444.0 5,745.8
% chg 172.3 93.3 27.0 59.2 44.6 29.3
Total Expenditure 698.4 1,365.2 1,721.4 2,729.2 3,953.3 5,121.2
Net Raw Materials 628.3 1,279.2 1,583.8 2,488.9 3,610.0 4,681.8
Other Mfg costs 37.3 41.0 63.3 114.1 165.6 209.5
Personnel 32.8 45.0 74.4 126.2 177.8 229.8
Other - - - - - -
EBITDA 88.4 155.3 208.9 344.2 490.7 624.7
% chg 227.9 75.7 34.5 64.8 42.6 27.3
(% of Net Sales) 11.2 10.2 10.8 11.2 11.0 10.9
Depreciation & Amortisation 8.9 5.5 7.5 10.3 14.9 20.7
EBIT 79.5 149.8 201.4 333.9 475.8 604.0
% chg 228.6 88.3 34.4 65.8 42.5 26.9
(% of Net Sales) 10.1 9.9 10.4 10.9 10.7 10.5
Interest & other Charges 18.0 26.8 57.9 53.8 90.7 126.1
Other Income 0.3 6.6 31.7 25.0 37.8 47.4
(% of PBT) 0.5 5.1 18.1 8.2 8.9 9.0
Others - - - - - -
Recurring PBT 61.9 129.6 175.2 305.1 422.8 525.3
% chg 231.0 109.4 35.2 74.2 38.6 24.2
Extraordinary Expense/(Inc.) - - - - - -
PBT (reported) 61.9 129.6 175.2 305.1 422.8 525.3
Tax 21.1 41.1 59.6 103.7 143.8 178.6
(% of PBT) 34.0 31.7 34.0 34.0 34.0 34.0
PAT (reported) 40.8 88.5 115.6 201.5 279.1 346.7
Add: Share of earnings of
- - - - - -
associate
Less: Minority interest (MI) (0.6) 1.1 0.1 0.1 0.2 0.2
Prior period items - - - - - -
PAT after MI (reported) 41.4 87.3 115.4 201.3 278.9 346.5
ADJ. PAT 41.4 87.3 115.4 201.3 278.9 346.5
% chg 212.5 110.8 32.2 74.4 38.5 24.2
(% of Net Sales) 5.3 5.7 6.0 6.6 6.3 6.0
Basic EPS (Rs) 38.4 12.1 16.0 28.0 38.7 48.1
Fully Diluted EPS (Rs) 5.8 12.1 16.0 28.0 38.7 48.1
% chg 212.5 110.8 32.2 74.4 38.5 24.2
Note: * 18 months period
June 1, 2010 4
5. BGR Energy I 4QFY2010 Result Update
Balance Sheet (Consolidated) (Rs cr)
Y/E March FY2007* FY2008 FY2009 FY2010E FY2011E FY2012E
SOURCES OF FUNDS
Equity Share Capital 10.8 72.0 72.0 72.0 72.0 72.0
Preference Capital - - - - - -
Reserves& Surplus 72.1 401.7 491.9 634.3 828.9 1,091.2
Shareholders Funds 82.9 473.7 563.9 706.3 900.9 1,163.2
Minority Interest 1.5 2.7 2.8 2.9 3.1 3.3
Total Loans 246.4 502.7 709.0 933.6 1,333.6 1,633.6
Deferred Tax Liability - 35.6 74.7 155.1 155.1 155.1
Total Liabilities 330.9 1,014.7 1,350.4 1,797.9 2,392.7 2,955.2
APPLICATION OF FUNDS
Gross Block 63.3 73.4 124.5 189.7 268.8 367.8
Less: Acc. Depreciation 24.9 20.6 26.8 37.1 52.0 72.7
Net Block 38.4 52.7 97.7 152.6 216.8 295.1
Capital Work-in-Progress 3.0 1.1 5.4 3.1 4.0 5.0
Goodwill 0.5 0.6 0.6 0.6 0.6 0.6
Investments 0.3 151.4 0.5 0.5 0.5 0.5
Current Assets 583.2 1,332.9 2,569.0 3,769.9 4,533.7 5,697.2
Cash 92.9 307.0 615.2 1,028.0 1,061.1 1,214.7
Loans & Advances 87.9 266.3 643.2 727.3 888.8 1,149.2
Other 4.0 8.6 17.8 18.1 26.7 34.5
Current liabilities 294.5 524.0 1,322.9 2,128.9 2,363.0 3,043.4
Net Current Assets 288.7 808.9 1,246.2 1,641.0 2,170.8 2,653.9
Mis. Exp. not written off - - - - - -
Total Assets 330.9 1,014.7 1,350.4 1,797.9 2,392.7 2,955.2
Note: * 18 months period
Cash Flow Statement (Consolidated) (Rs cr)
Y/E March FY2007* FY2008 FY2009 FY2010E FY2011E FY2012E
Profit before tax 61.9 129.6 175.2 305.1 422.8 525.3
Depreciation 8.9 5.5 7.5 10.3 14.9 20.7
(Inc)/Dec in Working Capital (107.3) (306.1) (129.2) 18.0 (496.6) (329.6)
Less: Other income 0.3 6.6 31.7 25.0 37.8 47.4
Direct taxes paid 22.2 14.8 20.5 103.7 143.8 178.6
Cash Flow from Operations (59.1) (192.3) 1.3 204.7 (240.4) (9.6)
(Inc.)/Dec.in Fixed Assets (28.4) (8.1) (55.5) (62.9) (80.0) (100.0)
(Inc.)/Dec. in Investments 4.6 (151.1) 150.9 - - -
Other income 0.3 6.6 31.7 25.0 37.8 47.4
Cash Flow from Investing (23.4) (152.7) 127.1 (37.9) (42.2) (52.6)
Issue of Equity - 319.7 - - - -
Inc./(Dec.) in loans 160.1 256.3 206.3 224.6 400.0 300.0
Dividend Paid (Incl. Tax) 3.8 16.8 25.3 59.0 84.2 84.2
Others 1.1 (0.0) (1.3) 80.4 - -
Cash Flow from Financing 156.3 559.2 181.0 165.7 315.8 215.8
Inc./(Dec.) in Cash 74.8 214.1 308.1 412.9 33.1 153.6
Opening Cash balances 18.1 92.9 307.0 615.2 1,028.0 1,061.1
Closing Cash balances 92.9 307.0 615.2 1,028.0 1,061.1 1,214.7
Note: * 18 months period
June 1, 2010 5
7. BGR Energy I 4QFY2010 Result Update
Research Team Tel: 022- 4040 3800 E-mail: research@angeltrade.com Website: www.angeltrade.com
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Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section).
Disclosure of Interest Statement BGR Energy
1. Analyst ownership of the stock No
2. Angel and its Group companies ownership of the stock No
3. Angel and its Group companies’ Directors ownership of the stock No
4. Broking relationship with company covered No
Note: We have not considered any Exposure below Rs 1 lakh for Angel and its Group companies.
Address: Acme Plaza, ‘A’ Wing, 3rd Floor, M.V. Road, Opp. Sangam Cinema, Andheri (E), Mumbai - 400 059.
Tel : (022) 3952 4568 / 4040 3800
Angel Broking Ltd: BSE Sebi Regn No : INB 010996539 / CDSL Regn No: IN - DP - CDSL - 234 - 2004 / PMS Regn Code: PM/INP000001546 Angel Securities Ltd:BSE: INB010994639/INF010994639 NSE:
INB230994635/INF230994635 Membership numbers: BSE 028/NSE:09946
Angel Capital & Debt Market Ltd: INB 231279838 / NSE FNO: INF 231279838 / NSE Member code -12798 Angel Commodities Broking (P) Ltd: MCX Member ID: 12685 / FMC Regn No: MCX / TCM /
CORP / 0037 NCDEX : Member ID 00220 / FMC Regn No: NCDEX / TCM / CORP / 0302
June 1, 2010 7
