| BGR ENERGY SYSTEMS Ltd.
CMP Rs.594, Upgraded to Accumulate, with a target of Rs.705
BGR Energy has reported excellent set of numbers for the quarter ended March'10 which was way above our expectations, with Revenue and PAT increasing by 131% YoY and 130% YoY to Rs.16597 million and 1083 million.
OUTLOOK & VALUATION
BGR Energy is one of the leading players in the BOP space. Increasing thrust to augment power capacities coupled with huge investment outlay by the government over the next 8-10 years would provide huge opportunities to players like BGR. Healthy order-book position which stands at ~3.3x its FY10 sales along with pick-up in the execution of two large EPC contracts provides strong revenue visibility over the next few years. Strong performance by the Company in FY10 has mitigated our concerns on its execution capabilities. At the CMP of Rs.594, the stock is quoting at 16.3x and 12.5x its FY11E and FY12E EPS of Rs.36.3 and Rs.47.0 respectively. Hence considering dynamic industry scenario, healthy order-book position coupled with its strong execution capabilities, we upgrade our rating on the stock from 'HOLD' to 'ACCUMULATE' with a target price of Rs.705.
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BHATIYA PARESH J
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