Areva t&d india ltd.pdf (ankush1)

Kaycee Research
India Research

Initiating coverage
Areva T&D India Ltd

April 16th, 2008 Areva T&D India Ltd 1

Kaycee Research
Stock information
BSE 522275
Bloomberg ATD IN
Reuters ALST. BO Areva T&D India Ltd Buy
Mkt cap Rs 79381mn
Equity Rs 478.2mn Powering profits through strategic expansions
Face value Rs 10
52 Weeks High/Low Rs 3280/1119
Sensex 16153
Nifty 4880

Shareholding as on 31ST Dec
2007 (%)
Promoters 72.2
Public 11.3
FIIs 2.1
Institutions 11.5
Corporate bodies 2.9
Current Market Price Rs 1660
Target price Rs 2080
Areva T&D vs Sensex

Financial summary
3800 27000
Particulars Sales PAT EBIDTM PATM EPS PE P/ EV/ ROCE ROE
Rs mn Rs mn % % Rs. BV EBIDTA % %
21000
2800
FY07 20063.0 2195.5 17.8 10.9 46.0 36.1 14.5 22.5 51.3 40.0
15000
1800 FY08E 24054.4 2540.3 17.9 10.6 53.1 31.2 10.6 18.7 40.3 33.8
9000
FY09E 35344.6 3899.1 18.1 11.0 81.6 20.3 7.3 12.6 47.9 35.7
800 3000 FY10E 43662.5 4965.9 18.2 11.4 103.9 16.0 5.2 9.8 35.7 32.3
Areva T&D SENSEX
25-Jul 9-Nov 26-Feb

Sector: Power Ancillary Analyst: Ankush Mahajan
April 16th, 16th, 2008
April 2008 Areva T&D India Ltd 2
ankush.m@kaycee.com

Table of Contents Kaycee Research
Page no

Investment summary ……………….……4
Company overview .……………………5
Revenue mix & order book …………………6
Business Structure ……………………8
Products & Applications …….……………9
Capacity Expansion …………………10
Industry overview .……………………11
SWOT Analysis …………………….16
Key Management ……………………….17
Earning estimates .……………………18
Investment concerns ……………………20
Consolidated financials …………………21
Valuations ……………………23


Investment rationale Kaycee Research
Thrust on T&D in the XIth and XIIth plan
Govt. has planned huge capex in the Transmission & Distribution (T&D) space in the power sector. Areva T&D which is
one of the leaders in the same would benefit from the investments planned. Investments planned by PGCIL and
investments on the back of APDRP scheme would result in benefit for players like Areva T&D. Areva T&D is present in
Transformers, Switchgears and EPC work for power plants.

Better product mix and enhanced project management to increase the margins going forward
The company’s operating margins has increased by 480 basis points by FY07 due to better product mix and enhanced
project management. With the focus now on reducing T&D losses, higher KV orders are being planned which would
increase the order inflow for players like Areva which have the capability for executing such higher KV orders. Areva is
the first player to have executed 765kv substation in the country for NTPC’s Sipat power plant in Jan, 2007. Areva has
good execution capabilities and we expect that these turnkey high end value projects will improve the operating
margins as well as increase the bottom line over the period of three years.

Stepping up investments across product categories
Areva is spending Rs 700cr for green field and brown field expansion. It currently has 8 facilities and is planning 3
more facilities in Hosur, Chennai and Baroda. Areva is setting up a 765KV transformer facility at a cost of Rs 5bn. The
company is also setting up a R&D lab and an HV switchgear facility. With the commencement of these operations we
expect that company’s turnover will double in FY10 that is the target set up by the management.

Valuation
Areva T&D trades at 20.3x EPS of Rs 81.7 for FY09E and 16.0x EPS of Rs 103.7 for FY10E and at a substantial
discounts to its closet comparable ABB. We are initiating our coverage on the stock with a BUY rating and a target
price of Rs 2080 over a period of 18 months (20x its FY10E Earnings).


Company overview Kaycee Research
Areva is France based Group has manufacturing facilities in 43 countries and a Continuous topline increase since 2005
sales network in more than 100 countries, AREVA offers customers reliable Rs Mn
technological solutions for CO2 free nuclear power generation and electricity 50000
transmission and distribution.
40000
Areva's T&D division is an active player around the globe and Areva T&D India
is a part of this division. The company’s products and systems serve to CAGR 30%
30000
transmit and distribute electricity, as well as operate networks through
information management Areva T & D India Ltd is present at all stages of the
20000
supply power chain, from the generator to the end user, backed by a services
portfolio. Areva T & D India has 8 manufacturing units, 3 Project offices and 1
10000
service office, 20 Sales office with 3500+ employees in India.

0
Quantum jump in exports FY06 FY07 FY08E FY09E FY10E
The company’s export has grown significantly in the last financial years and
Revenue
10% revenue is due to export, which will touch to 14% in the coming two
years. The company has been awarded two new projects at Qatar and Kenya

126 Million Euro Order from KAHRAMA Water & Electricity to supply six
Turnkey 66 kV GIS Substations.

26 Million Euro Order from Kenya Power & Light for turnkey substations for
the distribution network

Leaders in high end products and services
Areva has wide presence in industries like Utilities, Metals, Processing, Oil &
Gas etc. It is the technology leader in high end EHV products in India. The
company has leadership in Gas Insulated Switchgear (GIS) and 765 kV
transformers. The company is going to set up 1200kV substations in FY12 as
per the growing demand of EHV lines of 1200kV.


Revenue mix & order book Kaycee Research
Areva T & D India Ltd is an India-based company engaged in the Revenue Mix For FY07
business of power transmission and distribution. The company’s Current Trans Bushing
Others
0.80%
products and systems serve to transmit and distribute electricity, 2.93% Including
Spares
as well as operate networks through information management. Line Traps 2.13%
1.15%
Switchgears
Revenue mix 30.14%

Areva’s revenue mix consists various products and systems for
power transmission and distribution. The largest chunk comes from
Automation Systems Business (including services) which is growing
at growth of 34%. The company’s primary focus would be Project items
35.81%
expanding margins by focusing on high margins systems business.
Control Panels
3.58%

The company has a leading position in MV Switchgear & HV
Vacuum
Switchgear business in the worldwide market and recorded a Interruptors
Trans &
Reactors
growth of 23% & 76% respect. The company is expanding the 0.11% 23.35%

capacity in switchgear business.
Orders Intake on the rise
Transformer sector recorded a very strong growth of 81% in sales Rs Mn
and company has high operating margins in this business. 30000 CAGR 39%
29343

24180
Order intake almost double in 2 years
The company currently has unexecuted order backlog of around Rs 20000
29,343 mn (as of January 2008), which is project specific and 15282

executable as over the next 03 to 18 months time-frame. This
order book grows up 39% CAGR over the last two years and will
10000
pick up as the company is investing in fresh capacities which will
come in 4Q FY08.

0
2005 2006 2007


Prestigious Projects commissioned in 2007 Kaycee Research
Areva T & D India Ltd is a leader in high end products and services
in terms of introduction of new projects in India. It designs,
manufactures and supplies a complete range of equipment, systems
and services for all stages in the transfer of electricity, from the
generator to the large end-user.

765 kV Turnkey Substation for NTPC Sipat
The first 765kV sub-station project in India was executed by Areva
T&D for NTPC’s Sipat Project. This project is a land mark event in
India’s electrical grid as it takes India to the extra high voltage club
(EHV) for Transmission System.

Largest Generating Transformer
Areva T&D India has successfully manufactured with in India the
largest generating transformer 370MVA/220 kV delivered to
Reliance Energy in the last year. The only established manufacturer
in India with online linkage to world class technology and globally
concurrent design.

SCADA Systems
Supervisory Control And Data Acquisition (SCADA) is the remote
control of breakers and generators, also monitors loads from the
control centre. Areva has State of the art technology in the
automation systems business. Areva has commissioned City
Distribution SCADA Systems 9 out of 10 Circles for MSETCL. This is
an exemplary model for other SEBs to emulate with APDRP 2 funds.


Business Structure Kaycee Research

Areva T&D India specialists in T&D sector. Areva designs, manufacture
and supply a complete range of products, systems and services

Areva T&D India

Systems Products Automation Systems Services

HV Substations > 132kV High Voltage Energy Management Field Services
• High Voltage Substation • SF6 Circuit Breaker Systems (EMS)/ (DMS) – Erection, maintenance,
• Generator Circuit Breaker ‘e-terra platform’ commissioning, Testing,
- Air Insulated
• HV GIS EMS/ SCADA for supervision etc.
High Voltage Substation
- Gas Insulated • Instrument Transformer Transmission Networks

• Power Transformer Relay Product services
Power Electronics Substation Automation Maintenance & servicing of
Converter Substations Medium Voltage Systems (SAS) – ‘PACiS’ products
FACTS Products
Medium & Low Voltage BCU/ RTU based Substation
HVDC Switchgear
SVC Automation Systems Networking Consulting
Distribution Transformer
Power Distribution Convention Control Planning, analysis and
Lightning Arresters
Supply, Testing, Erection Systems design of T&D systems
MV GIS
and Commissioning of Control Panel up to 765 kV
RMU
Distribution Systems up to
Prefabricated Substations Telecommunication Training
132 kV
Systems
Products and systems
Telecom Network
Management System


Product offerings Kaycee Research
Areva T&D India is a major T&D player in India, its cutting edge technological solutions facilitate the efficient transmission
and distribution of electricity to utilities and industrial customers. It designs, manufactures and supplies a complete range
of equipment, systems and services for all stages in the transfer of electricity, from the generator to the large end-user.
Systems Business
The Systems Business of Areva T&D India, specializes in offering a wide range of
complete turnkey solutions for efficient distribution of quality power ad control of
energy flows. The demands of the power supply networks involved and specific
customer needs are taken into account and solutions are customized accordingly.
These solutions comprise a unique combination of project management, substation
management, grid management and technically advanced products.
Products
Areva T&D India designs, manufactures and supplies a superior range of high and
medium voltage products for a constantly evolving power market. The range of
products comprises every stage in the process of electricity transfer from generator
to end user. The range includes mission – critical equipment that facilitates reliable,
optimal and secure operations across power networks.
Automation Systems Business
Automation Systems Business of Areva T&D India provides world class system
solutions for managing energy networks of varying capacities. It ensures reliable,
efficient & secures operations of infrastructure and networks. The business offers
solutions and technologies which vary from intelligent field devices to
comprehensive energy management solutions for transmission and distribution
networks, real time power control, information management and energy market
power trading.
Services
Areva T&D India offers a comprehensive range of services like Erection, Testing,
Commissioning, Supervision, Maintenance, Repair and Emergency Support for T&D
products and systems.


Massive capacity expansion Kaycee Research
Areva T&D has planned aggressive capacity addition over next 1.5 -2 years to capitalise on this opportunity. The company
is setting up a large facility (around 10,000MVA) to manufacture power transformers of upto 1,200kV and other
distribution and medium voltage transformers at Baroda with an investment of Rs5bn. At Hosur and Chennai, the
company is investing Rs1bn each to setup capacities for instrument transformers and circuit breakers respectively. The
company is also expanding the capacity of its existing facilities.

Present Capacity Expected
Investment
Locations & Products Units capacity Expansion startup
India
Switchgear (Chennai+Kolkata) Nos. 166,900 - Nil Operational
Control Panels (Bangalore) Nos. 2,000 - Nil Operational
Transformers (Naini+Chennai) MVA 9,000 - Nil Operational
Vacuum interrupter (Kolkata) Nos. 36,000 - Nil Operational
Line Traps (Bangalore) Nos. 900 - Nil Operational
Instrument Transformer (Bangalore) Nos. 900 - Nil Operational
Bush (Bangalore) Nos. 3600 - Nil Operational
Green Field Expansion
Switchgear (Paddapai) Nos. Nil 155,500 Rs 1000mn Dec. 2008

Transformers (Baroda) MVA Nil 10,000 Rs 5000mn Dec. 2008

Instrument Transformer, LT (Hosur) Nos. Nil 900 Rs 1000mn Dec. 2008
Total Investment Rs 7000 mn

Planned capex of about $ 177 mn (about Rs 700cr) - for next two years

Ongoing capacity expansion in India will double turnover over next two years
Increasing capacity by almost 2x in India by setting up new green field plant at Baroda, Hosur & Paddapai and also
increased the current existing capacity of other products. With the commencement of these operations we expect that
company’s turnover will double in FY10 that is the target set up by the management.

Increasing capacity to almost 2X in next two years


Kaycee Research

Industry analysis – stronger for longer period


Peak and base deficits imply bigger generation target Kaycee Research

We believe that with in power equipment sector, Transmission & Distribution, will continue grow even beyond FY10 as the
current generation capex will near completion.

The deficit in power supply in terms of peak availability and of total The power capex cycle will be stronger for the long period
energy availability during the current year was 14.8 per cent and 8.4 per as the Ministry of Power’s (MoP) has set up generation
cent, respectively. According to our latest estimates India added 24GW targets for the XI Plan (FY07-12E) is 79GW and for XII Plan
of capacity in the Xth Plan (65% achievement). Further we expect India (FY12-17E) is 87GW.This implying that the capacity
to add 54GW in the XIth Plan an achievement of 78% against the addition target in the next 10 years from FY07E-FY17E is
targets. Inspite addition of this capacity, India would continue to have a likely to be 166GW up 89% vis-à-vis that in FY97A-FY07E.
peak load deficit of 9.7%, also have base demand deficit of 7.6% in
FY12E. India Plan Wise Capacity Addition Targets and Achievements

Target Actual
16.0% Plan Period GW GW Achievement Growth
14.80%

V (74-79) 12 10 83%
14.0%
13.80%
12.30% VI (80-85) 20 14 70% 40%
12.0% 12.30%
10.50% VII (85-90) 22 21 95% 50%
9.60% 9.70%
10.0%
10.00% VII (92-97) 31 16 52% -24%
8.40%

8.0% 7.60%
8.40% 7.00% 8.10% IX (97-02) 40 19 48% 19%
7.30%
6.0% X (02-07) 37 24 65% 26%

4.0% XI (07-12E) 79 62 78% 157%
FY06 FY07 FY08 FY09E FY10E FY11E FY12E

Base Demand Deficit Peak Shortage
XII (12-17E) 87 74 85% 20%

Source: CEA and Kaycee Research


Increase in National Grid Capacity in XI Plan Kaycee Research

In order to optimize the utilization of generation capacity, PGCIL is The total investment in the transmission sector is forecast by
executing the build out of the National Grid to enable the transfer of the CEA to reach Rs 1400bn by 2012. The table below
power from surplus to deficit regions. The National Grid, when fully outlines the total transmission infrastructure (substations
operational, is expected to have a total inter regional transmission and lines).
capacity from 17000 MW currently to 37150 MW by 2012. Setting up
a National Grid requires the gradual strengthening and improvement Transmission capacity ramp-up in 11th plan
of regional grids and their progressive integration, through extra
Unit X Plan, 2007 XI Plan 2012
high voltage and HVDC transmission lines. This would be entail
investments of Rs 710bn, as shown below Transmission lines

Investment in setting up National Grid 765 kV ckm 1,704 7,132

Rs bn XI Plan (FY08-12E) HVDC +/- 500 kV ckm 5,872 11,078

HVDC 200 kV Monopole ckm 162 162
Power Grid’s participation 500
400 kV ckm 75,722 125,000
Private Sector participation 210
230/220 kV ckm 114,629 150,000
Total Investments 710
Total transmission line ckm 198,089 293,372
Source: IEEMA and Kaycee Research
Substations
40000
37150
HVDC BTB MW 3,000 3,000
35000

HVDC Bipole + Monopole MW 5,200 11,200
30000
25150 Total- HVDC Terminal
25000
Capacity MW 8,200 14,200
W

20000
M

17000 765 kV MVA 2,000 53,000
15000
400 kV MVA 92,942 145,000
9450
10000
230 / 220 kV MVA 156,497 230,000
5050
5000
Total - AC substation
0 capacity MVA 251,439 428,000
FY02 (IXTh FY05 FY07 (XTh FY10E FY12E (XITh
Plan Ends) Plan Ends) Plan Ends) Source: CEA,
Source: Power Grid and Kaycee Research http://powermin.nic.in


Use of T&D equipments in the power value chain Kaycee Research
Addition of generation capacity in India with the set up National Grid, the equipment manufactures and service
providers will get benefit from the entire power value chain have products like boilers, turbines, civil structures,
switchgears, circuit breakers, substations, transformers, transmission towers, cables and meters.

Generation, Transmission and Distribution Value Chain

Source: Emco website


Accelerated Power Development & Reform Programme Kaycee Research
Transmission & Distribution losses have been consistently on T&D Losses in India (%)

3 8
higher side, and reached to the level of 32.86% in the year

3 .9
2 6

2 4

2 3

2 8

2 2
0 3

3 .8

3 .5

3 .5

3 .3

3 .1
3 .9
2000-01 due lack of adequate investment in this sector.

6 5
2 .4
4 3

4 9
2 .5

2 .7
Government of India and States has launched the Accelerated

2 7
1 3

2 .2
1 1

2 .1
2 .4
Power Development & Reform Programme (APDRP) in 2001, for
the strengthening of Sub Transmission and Distribution network
and reduction in AT&C losses with an objective of the programme
was to bring Aggregate Technical & Commercial losses below
15%.

93-94

94-95

95-96

96-97

97-98

98-99

99-00

00-01

01-02

02-03

03-04

04-05

05-06
Extension of Accelerated Power Development Reforms
Source: Ministry of power
Programme (APDRP) rural electrification scheme (RGGVY) in the
11th plan shows the government intent to improve the condition
Segment of APDRP Rs Cr
of AT&C losses and the last mile connectivity. These two
Sub-Transmission & Distribution for Urban & 197000
schemes together will require an investment of Rs 3070bn which
Rural Areas
will provide an impetus to all T&D equipment manufacturers.
RGGVY 40000
We expect a pick up in order-flow for Indian T&D equipment
APDRP and Other Scheme 40000
suppliers in coming quarters. Most of the projects to be
Decentralized Distributed Generation 20000
awarded by Power Grid over next two years, there would be
strong order flow for BHEL in FY07 and FY08 is a good lead Others 10000

indicator of demand for T&D equipment going ahead. We Total 307000
expect the demand for T&D equipment to remain robust even
Source: Planning commission
after FY10.


SWOT Analysis Kaycee Research

Strengths Weaknesses

Areva is the first player to have executed 765kv Any change in Government's policy could impact
substation in the country for NTPC’s Sipat power its profitability
plant in Jan., 2007
Non availability of skilled manpower for excellent
Areva possesses the ‘State of the Art’ technology product development and execution of turnkey projects
in T&D domain in India with local manufacturing
plants and good project execution teams

The upcoming increase in capacity for Transformers
and High Voltage Switchgear factory would enable
Areva to meet the needs of the growing market

Threats
Opportunities

Huge challenge to execute 78 GW of generation
The increasing requirement of High Voltage Substations
capacity by the Government in the 11th five year plan
provides major opportunities for selling Products as
as compare to actual performance in the past i.e. 60%
well as Turnkey Systems Projects

The phenomenal rise in raw material costs especially
765kV Transmission Systems and HVDC links would
metals may put strain on the margins
open a large market

Competitors are adding new capacities and there are
Ultra Mega Power Projects that are being finalized
new entrants who are trying to enter into the T&D
would require products and systems of T&D
market


Key Management Kaycee Research

Mr. S.K. Poddar Mr. S.K. Poddar has been on the company’s Board for the past 19 years. A well
Chairman known and reputed industrialist, he is also the Chairman of several other public
limited companies. He was the past President of FICCI and the Indian Council of
Arbitration and Vice President of International Chamber of Commerce.

Mr. Rathin Basu Mr. Rathin Basu, is well known personality in the Indian Energy sector, both in
Managing Director Generation and in T&D, due to his 28 years of experience and exposure in the
Energy business involving NTPC, Power Grid, Utilities & SEBs, Industry and
Infrastructure segments. Mr.Basu is also country’s President of AREVA T&D in India

Mr. Michel Augonnet Mr. Michel Augonnet graduated as Electrical Engineer from the Ecole Superieure
Director d'Electricite (France). He has diversified experience of Nuclear Power Station and
turnkey hydro power stations developments. He has been appointed Executive Vice
President - International Sales & Service Country Organization of AREVA.

Mr. Arthur de Mr. Arthur de Montalembert, graduated in Economics and Finance from the Paris
Montalembert Institute. In his career, he served energy divisions of both private as well as public
Director corporations in different countries. He is the Senior Vice President – International &
Marketing, AREVA.

Mr. C. M. A. Nayar Mr. C. M. A. Nayar is a B.Tech in Electrical Engineering from IIT at Madras,
Director Advanced Management Training at INSEAD, Paris. He has held several key
positions in different division of the company. He is working as Vice President,
Quality Focus & Change Management, at High Voltage Business.


Earnings Outlook & Financials Kaycee Research
We expect the company to register a topline CAGR of 30% from Rs Mn

Rs 20063mn during FY07 to Rs 43662mn by FY10E. Net revenues of 50000 90%
the company to grow by 20% Y-o-Y basis to Rs 24054.4 in FY08E,
further with the commissioning of new facilities in FY09 we expect 40000
75%

substantial increase in net revenues of the company registering a
60%
growth of 47% Y-o-Y to Rs 35345mn in FY09E and then to Rs 30000

43662mn in FY010E, registering a growth of 24% Y-o-Y. 45%

20000
30%
Net profit of the company is expected to grow at Rs 2540mn in
10000
FY08E registering a YoY growth of 16%, Rs 3900mn in FY09E 15%

registering a YoY growth of 53.7%, and then to Rs 4966mn in
0 0%
FY10E with a growth of 27%, at a CAGR of 32% for the FY07 to FY06 FY07 FY08E FY09E FY10E
FY10E period. Revenue % Growth

The strong sales growth is on account of the robust order book which stood at Rs 29343mn as on December 2008. This
order book is more than the sales of the last year and it has 38% orders from the systems business and services which
posses higher operating profit margins.

The company has secured an order worth of Rs 4180mn from Essar Constructions to provide equipments for power
project in Gujarat and MP in the last week.

Areva T&D India has successfully completed, first of its kind for T&D in India, 765 kV Sipat Substation for NTPC. PGCIL is
in process to open tender in the month of Dec. to set up four to five 765kV substations. Areva is the solely master to set
up these high end projects in the country and we expect that the company will get these projects. The total cost to set
up one 765kV substations is Rs 150cr to Rs 300cr with the execution period of 20 to 24 months.

Areva has good execution capabilities and we expect that these turnkey high end value projects will
improve the operating margins as well as increase the bottom line over the period of three years.


Earnings Outlook & Financials Kaycee Research
Rs Mn
The company operating margins has increased by 480 basis 10000 24.0%
points by FY07 due to product mix and enhanced project 18.2%
18.1%
management. The contribution of systems business and 8000 17.5%
18.0%
service business is expected to be higher going forward, as 17.8%
high growth is envisaged in this segment. The EBITDA 6000 13.2%
margins are expected to be stable in the range of 18% over 12.0%
8202.5
the FY09E & FY10E as commodity prices will soften in FY09E &
4000
FY10E, product mix of high ends value projects and enhanced
2127.1
project management. 3570.0 6259.5
6.0%
2000 4358.5

In this inflationary period the company has put a price
0 0.0%
escalation clause with the clients, thus company will pass the 2006 2007 2008E 2009E 2010E
rise in price of material cost to clients.
EBIDTA OPM

Better product mix & enhanced project management results in improved operating margins


Key concerns Kaycee Research

Slowdown in investments in generation, transmission and distribution
The power sector in India is highly politicized given the number of employees and the poor financial situation of the State
Electricity Boards (SEBs). Sector reforms progress in fits and starts, though there is perceptible change post the awarding
of the first 3 Ultra Mega Power Projects (UMPPs).

Efficient implementation of APDRP and RGGVY programme
The company’s growth is mainly dependent on the efficient implementation of APDRP & RGGVY programme by the
government. Thus the business as whole is sensitive to the actions of the Government which can prove to be risky.

Execution and management of projects
The execution and management of projects is the most important part of the company’s business any delay in projects
execution lead to delay in conversion of the order book into revenues.

Substantial increase in input prices
The key inputs are steel, copper and aluminum. A substantial increase in raw material prices could affect profitability.
Turnkey contracts expose Areva’s business to raw material increases. Further, though there is a raw material price pass-
through on domestic orders, export orders are typically at fixed prices.


Consolidated financials Kaycee Research

Profit and Loss Account Rs MN Balance sheet Rs MN

Particulars FY07 FY08E FY09E FY10E Particulars FY07 FY08E FY09E FY10E
Net sales 20063.0 24054.4 35344.6 43662.5 Share capital 478.2 478.2 478.2 478.2
Net sales growth (%) 25% 20% 47% 24% Reserves 5014.8 7038.7 10444.6 14916.8
Expenditure 16493.0 19748.7 28947.2 35715.9 Total Networth 5493.0 7516.9 10922.8 15395.0
EBIDTA 3570.0 4305.7 6397.4 7946.6 Secured loans 0.0 0.0 0.0 0.0

EBIDTA growth (%) 68% 21% 49% 24% Unsecured loans 1012.0 2012.0 1212.0 112.0

Depreciation 230.5 469.9 589.9 625.9 Total debt 1012.0 2012.0 1212.0 112.0

EBIT 3339.5 3835.8 5807.4 7320.7 Total Liability 6505.0 9528.9 12134.8 15507.0
EBIT growth (%) 72% 15% 51% 26% Net block 2293.0 4823.1 6233.2 6207.2
Interest 85.0 171.0 115.1 10.6 Capital WIP 0.0 0.0 0.0 0.0
Other Income 178.0 195.8 215.4 236.9 Investments 0.0 0.0 0.0 0.0

PBT 3432.5 3860.6 5907.7 7546.9 Inventories 2729.0 3295.1 5035.4 6220.4

Tax 1237.0 1320.3 2008.6 2581.1 Sundry debtors 10286.0 11862.5 15493.5 19139.7

Profit after tax (PAT) 2195.5 2540.3 3899.1 4965.9 Cash & bank 226.8 248.1 197.7 1682.9

PAT growth (%) 60% 16% 53% 27% Loans and advances 1346.0 1458.2 2165.5 2808.2

Extraordinary Items (EI) -3.2 -2.7 -1.8 -1.2 Total current assets 14587.8 16863.9 22892.1 29851.3

Net profit after EI 2198.7 2543.0 3900.9 4967.1 Current liabilities 8775.0 10557.2 15389.6 18950.7

Share Data Provisions 1887.0 1883.8 1883.8 1883.8
Total current liabilities 10662.0 12441.0 17273.4 20834.5
EPS (diluted) (Rs) 46.0 53.2 81.6 103.9
Net current assets 3925.8 4422.9 5618.7 9016.8
CEPS (Rs) 50.8 63.0 93.9 117.0
Miscellaneous exp 0.0 0.0 0.0 0.0
Book Value (Rs) 114.9 157.2 228.4 321.9
No of shares (mn) 47.8 47.8 47.8 47.8 Deferred tax 286.2 283.0 283.0 283.0

Dividend per share (%) 90% 90% 90% 90% Total Assets 6505.0 9528.9 12134.8 15507.0


Consolidated financials Kaycee Research

Key Financial Ratios Cash flow Rs MN

Particulars FY07 FY08E FY09E FY10P Particulars FY07 FY08 FY09E FY10E
Valuation Ratios Profit Before Tax 3432.5 3860.6 5907.7 7546.9
Add: Depreciation 230.5 469.9 589.9 625.9
Market price (Rs) 1660.0 1660.0 1660.0 1660.0
Add: Interest 85.0 171.0 115.1 10.6
P/E (X) 36.1 31.2 20.3 16.0
CF from operations 3927.5 4501.5 6612.7 8183.5
P/CEPS (X) 32.7 26.4 17.7 14.2
Change in WC 2404.0 472.6 1246.2 1912.8
P/BV (X) 14.5 10.6 7.3 5.2
Taxes 1114.0 1320.3 2008.6 2581.1
M cap/Sales (X) 4.0 3.3 2.2 1.8
EV/EBIDTA (X) 22.5 18.7 12.6 9.8 Miscellaneous exp. 0.0 -2.7 -1.8 -1.2

1.8 Cash from operation 409.5 2711.4 3359.7 3690.8
EV/Sales (X) 4.0 3.4 2.3
Profitability Ratios
EBIDTA margin % 17.8 17.9 18.1 18.2 Capital expenditure -1375.5 -3000.0 -2000.0 -600.0
PAT margin % 10.9 10.6 11.0 11.4 Investments 112.0 0.0 0.0 0.0
ROE % 40.0 33.8 35.7 32.3 Cash from investing -1263.5 -3000.0 -2000.0 -600.0
ROCE % 51.3 40.3 47.9 47.2
Efficiency Ratios Inc/Dec in debt 978.8 1000.0 -800.0 -1100.0
Asset turnover 3.1 2.5 2.9 2.8 Dividends -332.0 -494.9 -494.9 -494.9
Av collections period-days 187 180 160 160
Interest -91.0 -171.0 -115.1 -10.6
Av payment period-days 253 250 250 250
Others 0.0 -24.1 0.0 0.0
Inventory turnover-days 50 50 52 52 Cash from financing 555.8 309.9 -1410.1 -1605.6
Liquidity ratios
Current ratio 1.4 1.4 1.3 1.4 Inc./(Dec) in Cash -298.2 21.3 -50.4 1485.2
Interest coverage 42.0 25.2 55.6 746.9 Opening cash balance 525.0 226.8 248.1 197.7
Debt/equity 0.2 0.3 0.1 0.0 Closing cash balance 226.8 248.1 197.7 1682.9


Valuations and recommendations Kaycee Research
Comparative Valuation
Areva ABB BHEL
Market Cap (Rs Mn) 79381.0 246291.0 899334.0

FY07 PE(x) 36.1 50.1 37.3

FY08 PE(x) 31.2 33.9 28.5

FY09 PE(x) 20.3 26.0 22.2

FY10 PE(x) 16.0 20.0 17.0

FY07 P/B(x) 14.5 20.6 10.2

FY08 P/B(x) 10.6 15.1 8.1

FY09 P/B(x) 7.3 11.2 6.4

FY10 P/B(x) 5.2 8.2 4.9

FY07 RoE(%) 40.0 32.0 30.0

FY08 RoE(%) 33.8 34.6 29.3

FY09 RoE(%) 35.7 35.3 32.6

FY10 RoE(%) 32.3 35.7 33.4

At the current market price of Rs 1660, the stock is available at 20.3x and 16.0x its FY09E and
FY10E estimated earnings of Rs 81.6 and Rs 103.9 respectively. The company has been showing
stupendous growth over the last 3 years and we expect the company to continue the growth
momentum in the coming years as the Government’s drive to lower the T & D losses picks pace.
Areva is trading at a substantial discounts to its closet comparable ABB. We are initiating
our coverage on the stock with a BUY rating and a target price of Rs 2080 over a period of
18 months (20x its FY10E Earnings).


Kaycee Research

Institutional Research Team
Name Designation Email ID Contact No.

Ramachandran R. Iyer Head -Institutions rriyer@kayceeonline.com 022-22642057
(Research, Dealing & Sales)

Rahul Sanghvi Institutional Sales rahuljs@kayceeonline.com 022-22642059

Name Of Analyst Sector Coverage Email ID Contact No.

Jigisha Jaini Engg. & Capital Goods, Metals & Mining jigisha@kayceeonline.com 022-22642058

Shailesh Kumar Tele comm, Banking, Shipping & Logistics shaileshk@kayceeonline.com 022-22642029

Naini Thakore Oil & Gas, Textiles naini.thakore@kayceeonline.com 022-66366697

Ankush Mahajan Power, Fertilizers, Packaging ankush.m@kayceeonline.com 022-22642029

Harshad Gujrathi Media, Logistics harshad@kayceeonline.com 022-66366697

Strictly for Private Circulation only. All rights reserved. © Kantilal Chhaganlal Securities Pvt. Ltd.

DISCLAIMER & DISCLOSURE: This information & opinions in this report have been prepared by Kantilal Chhaganlal Securities Pvt. Ltd. The report & the
information contained herein are strictly confidential and meant solely for the authorized recipient and may be restricted by law or regulation in certain
countries. This report is for information purposes only for the authorized reader and does not construe to be any investment, legal or taxation advice. This
report is based on the information obtained from public sources and sources believed to be reliable, however, no warranty, express or implied, are given
for the accuracy or correctness of the same and it should not be construed as such. It is also not intended as an offer or solicitation for the purchase and
sale of any financial instrument.
Kantilal Chhaganlal Securities Pvt. Ltd. and/or its subsidiaries and/or directors, employees, officers or associates – including the persons involved in the
preparation/issuance of this report may have (a) from time to time, any interest or positions (buy/sell etc.) – financial (including in
derivatives/commodities market) or otherwise in the companies/securities covered/mentioned in this report and may have acted upon the information
&/or (b) been engaged in any other transaction, commercial or otherwise, in respect of the companies/securities covered in this report, like earning
brokerage, commission or act as a market maker &/or (c) performed or may seek to perform any merchant/investment banking services for such
companies or act as advisor or lender/borrower to such companies &/or (d) have other possible conflict of interest with respect to any recommendation or
any information/opinions that could affect the objectivity of this report. As a result, the authorized recipients of this report should rely on their own
investigations and analysis & seek professional advice. Any action taken by any one solely on the basis of the information contained herein is their own
responsibility alone and Kantilal Chhaganlal Securities Pvt. Ltd. and its subsidiaries or its directors, employees or associates will not be liable in any
manner whatsoever for the consequences of such action taken.
No data/information contained in this report shall be copied, forwarded, transmitted or distributed, in part or in whole, in any form or in any media,
without the previous written consent of Kantilal Chhaganlal Securities Pvt. Ltd.


Areva t&d india ltd.pdf (ankush1)

Recomendados

Recomendados

Mais conteúdo relacionado

Semelhante a Areva t&d india ltd.pdf (ankush1)

Semelhante a Areva t&d india ltd.pdf (ankush1) (20)

Último

Último (20)

Areva t&d india ltd.pdf (ankush1)