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A0NIII 1
Areva T&D India Ltd.
Analyst
P0rv 0ordshd
purvi.gorashia@acm.co.in
Tel: (022) 2858 3403
Key Data (INR)
CMP 1631
Target Price 1795
Key Data
Bloomberg Code ATD IN
Reuters Code AREV.BO
BSE Code 522275
NSE Code AREVAT&D
Face Value (INR) 10
Market Cap. (INR Bn.) 77.99
52 Week High (INR) 3280
52 Week Low (INR) 1199
Avg. Daily Volume (6m) 26332
1Year Beta (Sensex) 0.85
Shareholding %
Promoters 72.2
Indian Institutions 11.5
Foreign Institutional Investors 1.5
Private Corporate Bodies 3.0
Individuals & Others 11.8
Total 100.00
(INR Mn) CY07 CY08E CY09E
Net Turnover 20062.7 25868.9 34923.0
Operating Profit 3574.6 4460.0 6159.9
OPM (%) 17.8 17.2 17.6
PAT 2163.0 2733.3 3576.6
PAT Margin (%) 10.8 10.6 10.2
EPS (Rs.) 45.2 57.2 74.8
30 July, 2008
H O L D
Background
Areva T&D (India) Ltd, is a subsidiary of Areva T&D (France), a leading player in
transmission & distribution (T&D) business, globally. Formerly Alstom Ltd., the
company was taken over by Areva T&D in 2005 as Areva took control of Alstoms
world-wide T&D business.
Areva T&D India Ltd. is among the top three T&D players in India. The company
is engaged in providing products and systems to transmit and distribute electricity,
manage smooth energy fows and operate effcient networks through information
management. Its product offerings include power & distribution transformers,
switchgears, circuit breakers and products in the area of energy automation. The
company offers high-end T&D solutions such as 765 KV and HVDC transmission
projects and Gas Insulated Substations.
Highlights:
With increase in unit sizes of the power projects and requirement of power
transmission over longer distances, the demand for power transmission at higher
voltage levels and technological requirements are expected to increase.
Areva T&D Indias ability to offer high-end solutions can be attributed to its
access to the parents global R&D pool. The company claims a smooth technology
transfer process with its parent.
To cater to the increasing demand for its existing product line and manufacturing
Extra High Voltage equipments, Areva T&D India is expanding its product range
to cater to the expected pick up in demand from these areas.
Companys performance in terms of order intake during H1 of the current year
improved signifcantly. Order book increased to Rs. 39.3 Bn at the end of H1
CY08, from Rs. 20.3 Bn at the end of H1 CY07, registering an increase of 93%
YOY. Order intake during Q2 CY08 was of the order of Rs. 15 Bn with some
signifcant orders, like an order for Mundra UMPP. Company claims that it is a
market leader in terms of order intake during H1 CY08.
Outlook and Valuation
Strengthening of T&D infrastructure, increase in demand for higher voltage levels
and high-end technology offer good opportunities to the company with support from
its global parent. Capacity expansion coupled with healthy order infow are expected
to result in 32% CAGR in revenues and 29% CAGR in net proft over CY07 to
CY09E. At the CMP of Rs 1631, the stock trades at P/E multiple of 21.8 times its
CY09E EPS of Rs.74.8. We initiate coverage on the stock with Hold recommendation
and price target of Rs 1795, which is equivalent to P/E multiple of 24 times to its
CY09E EPS.