December 2015
Update | Sector: Capital Goods
Capital Goods
India Transmission
Ankur Sharma ([email protected]); +91 22 3982 5449
Amit Shah ([email protected]); +91 22 3029 5126
Capital Goods | Transmission
Contents
India Transmission Sector .................................................................................................. 3
Increased government focus on transmisson ..................................................................... 4
th
th
Mapping transmission spending over 10 –13 Plan .......................................................... 6
So what does it mean for transmission players? ................................................................ 9
Higher voltage and new technologies the way forward in transmission .......................... 14
Competitive intensity lower post implementation of domestic manufacturing clause..... 16
Tariff-based bidding for transmission projects ................................................................. 20
Planning the transmission system .................................................................................... 24
Annexures........................................................................................................................ 29
Companies .................................................................................................................. 33-63
ABB.............................................................................................................. 34
Alstom T&D India ........................................................................................ 39
Crompton Greaves....................................................................................... 48
KEC International ......................................................................................... 53
Larsen & Toubro .......................................................................................... 58
Prices as on 16 February 2016
Investors are advised to refer through important disclosures made at the last page of the Research Report.
February 2016
2
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
Capital Goods | Transmission
India Transmission
Transmission capex 11th -13th
plan (INR b)
Inter-state
Intra state
1500
1125
750
375
13th Plan
12th Plan
11th Plan
0
Transmission line addition
(ckm) 11th -13th plan
100,000
HVDC
400kv
765kv
220kv
75,000
50,000
25,000
13th plan
12th plan
11th Plan
0
India Transmission Sector
States to drive capex
Increased government focus on transmission
The availability of sufficient generation capacity and resolution of fuel supply issues
has driven government’s focus toward reducing transmission constraints and
ensuring seamless power transfer across and within states. India’s current
transformation capacity (220kva and above) stands at 2.3MVA/MW v/s the optimal
~7MVA/MW needed for uninterrupted power evacuation; this highlights the case
for increased investments in the transmission sector.
Transmission capex estimated at INR2.6t (+49%) in the 13th Plan (2018-2022e);
states to drive spending
Transmission capex is expected to grow 49% in the 13th Plan to INR2.6t, with interstate capex at INR1.3t (+8% v/s 118% in the 12th Plan) and the balance as intra-state
capex (+136%). A slowdown in the 13th plan in the inter-state capex (765/400kv) is
on account of a corresponding slowdown in generation capacity addition. Based on
the transmission capacity expected to be rolled out in the 13th plan, we estimate a
big jump in spending on intra-state transmission (220kv) and HVDC lines while capex
in the 765kv/400kv segment (transformers, lines, substations) will slow down. We
expect higher competitive intensity in orders at the 220kv level (versus 400/765kv)
as the number of players participating would be higher.
Grid shifts to higher voltages and new technologies; advantage MNC T&D players
The Indian grid (>132kv) has been moving toward higher voltages and new
technologies. Currently, inter-state transmission lines are primarily run at 400/765kv
level. Higher voltages lead to more efficient transfer of power while using lesser
space. Similarly, new technologies such as HVDC, static compensators and PMU’s
are being used to make the grid more stable. MNC T&D players such as Alstom T&D
India, ABB India and Siemens India have an edge over local players as they have
access to their parent’s technology and can introduce these products in India.
Tariff-based bidding - developers prefer players with established track record
With tariff-based bidding the norm for award of projects, developers would prefer
vendors with an established track record to ensure timely completion of the project
and failure free operation over the 35 year time period of the project. However,
aggressive bids could imply pricing pressure for equipment suppliers/EPC players.
Click here for Video Link
February 2016
Top picks and risks
Within our coverage, our top picks to play the transmission sector capex are Alstom
T&D (Buy, TP: INR470) and KEC International (Buy, TP: INR130). Other stocks with
meaningful exposure to transmission capex are ABB India (Neutral, TP: INR1380),
Crompton Greaves (Neutral, TP: INR165), L&T (Buy, TP: INR1,440) and Siemens India
(Sell, TP: INR1,010). Key risks to our rating are a slower-than-expected pick-up in
state spending and a sharp rise in imports for transmission equipment.
3
Capital Goods | Transmission
Increased government focus on transmisson
Transmission constraints and northern region blackout drive spending
Over the past year, Central government’s focus toward transmission has increased
—buoyed by the availability of sufficient generation capacity and resolution of fuel
supply issues, the government’s focus has turned toward reducing transmission
constraints and ensuring seamless power transfer across and within states.
Exhibit 1: Power Value chain – focus has shifted to transmission and distribution
Source: Ministry of Power, MOSL
Strong power generation growth — focus shifts to Transmission &
Distribution
India cumulatively added ~110GW in generation capacity over the last eight years.
With a targeted addition of 88GW(excl. renewables) in the 12th Plan ending FY17
(likely to be exceeded as 72GW already added till Dec’15), India would add ~145GW
over 10 years—between FY08 and FY17; this compares very favourably to the 8th,
9th, and 10th Five-Year Plans, which saw cumulative addition of a mere 55GW.
While India managed to add significant power generation capacity in the last 10
years, other inputs such as coal, transmission capacity and distribution reforms
failed to keep pace with it. The current government is focusing on:


Increasing coal production. The government intends to increase Coal India’s
production to 1bn tons by FY20; we do note that Coal India’s production grew
by 7% in FY15 and is up 9% YTD,
Resolving transmission and distribution constraints. The government has
already started focusing on removing transmission bottlenecks and the recent
UDAY scheme should hopefully lead to a turnaround of the discoms.
To ensure free and uninterrupted flow of power, every 1MW of new generation
capacity needs to have ~7MVA of equivalent transformation capacity added to the
system.
February 2016
4
Capital Goods | Transmission
Exhibit 2: Every MW of new generation capacity needs around 7MVA of transmission capacity
Generation
Generation Capacity
Generating
Transformer
Sending
765 KV
Receiving
765 KV
400 KV
Transmission
220 or
132 KV
Transmission Cap
requirement.
765 KV Generating system
MW
MVA
660
805
22 KV to
765 kv
1080
400 KV generating system
765 KV to
400 kv
1080
400 KV
to 220
1620
220 kv to 132 kv or
33kv
2430
6210
Sending
400 kv
Receiving
400 KV
9.4
Transmission Cap
requirement.
MW
MVA
22 KV to
400 kv
400 to 220 kv
or 132 kv
500
610
811
811
Sending
220 KV
22 KV to
400 kv
500
Receiving
400 KV
220 kv to
132 kv
500
wt
requirement
wt avg
220 KV generating system
MW
MW
200
224
1622
3.2
Transmission Cap
requirement.
1000
5
Assessment of transformation capacity
765 KV generating system-1 phase system-6 transformation
0.5
9.4
4.7
400 KV generating system-1 phase system-4 transformation
0.35
3.2
1.1
220 KV generating system-3 phase system-4 transformation
0.15
5
0.75
6.6
However, India currently has only 2.3MVA of transmission capacity per megawatt of
generation capacity (far below the required 7MVA); this largely explains the
congestion that is visible in inter-state transmission of power. While Power Grid has
done a good job in terms of adding transmission capacity, it has not been sufficient.
Understanding this need, the government opted to open the sector to the private
sector (from Jan’11 for inter-state and from Jan’13 for intra state transmission).
Exhibit 3: Transformation capacity analysis (220kv and above)
Generation
Transformation
MVA/
(MW)
Capacity (MVA)
MW
VI
42,584
46,621
1.1
VII
63,636
75,322
1.2
VIII
85,795
125,042
1.5
IX
105,045
181,942
1.7
X
132,329
257,639
1.9
XI
199,877
409,551
2.0
XII (Till December, 2015)
284,303
633,056
Plan
2.3
Source: CEA, MOSL
Another important event that contributed to the renewed focus on establishing a
robust and reliable transmission system was the northern region blackout in CY12
after a grid failure. Two severe power blackouts affected most of northern and
eastern India on July 30 and 31, 2012. The day 1 blackout affected over 300mn while
the day 2 blackout remains the largest power outage in history and affected over
620mn people, about 9% of the world population or half of India's population.
February 2016
5
Capital Goods | Transmission
Mapping transmission spending over 10th–13th Plan
Sharp pickup expected in intra – state spending
India currently has two transmission systems—Interstate Transmission System (ISTS)
and Intra-state Transmission System (Intra-STS). These systems together make up
337,000ckms of transmission lines (>220kv), 15,000MW of high-voltage direct
current (HVDC) terminals and 633, 000MVA of transformation capacity (incl. HVDC
lines).
Exhibit 4: Existing and planned transmission system capacity across India
th
Current
12th plan
12th
addition
plan end
(Dec, 15)
addition
plan end
5,872
3,560
9,432
12,938
7,440
16,872
2,184
3,066
5,250
23,789
27,000
32,250
400kv
75,722
31,097
106,819
144,067
38,000
144,819
220kv
114,629
21,351
135,980
155,666
35,000
170,980
Total
198,407
59,074
257,481
336,460
107,440
364,921
HVDC back-to-back
3,000
-
3,000
3,000
-
3,000
HVDC Bipole terminals
5,000
1,750
6,750
12,000
12,750
19,500
Total- HVDC Terminal Capacity, MW
8,200
1,550
9,750
15,000
12,750
22,500
765 kV
-
25,000
25,000
133,500
149,000
174,000
400 kV
92,942
58,085
151,027
197,932
45,000
196,027
220kv
156,497
67,277
223,774
278,588
76,000
299,774
Total- AC Substation capacity, MVA
249,439
150,362
399,801
618,056
10th plan
11th plan
end
HVDC Bipole lines
765kv
Description
11
Transmission Lines (220kv and above) ckm
HVDC terminal
AC Substations transformation capacity
270,000
669,801
Source: CEA, MOSL
Exhibit 5: Inter-state transmission system—current and proposed till FY17
Source: PGCIL, MOSL
February 2016
6
Capital Goods | Transmission
Spending on transmission in the 10th–13th Plans (FY03-22e)
Based on the capacity addition required for the inter-state (ISTS) and intra-state
transmission systems, a capex of INR2.6tn would be required over the 13th Plan. Out
of this, NR1.3tn would be spent on the ISTS and the balance INR1.3tn would be
spent by the states on the intra-state transmission network (INR300b on 400kv level
and the balance INR1, 000b primarily 220kv and below).
th
Exhibit 6: Spending on transmission in the 10-13 Plan period
10thplan(FY03-07)
INR b
11th plan(FY08-12e)
12th plan(FY13-17e)
13th plan(FY18-22e)
Total
PGCIL
Share
Total
PGCIL
Share
Total
PGCIL
Share
Total
PGCIL
Share
Inter State
200
190
95%
550
553
98%
1,200
1,000
83%
1,300
650
50%
Intra State
255
0%
550
100
18%
1,300
325
25%
Total (transmission)
455
562
190
42%
th
1,112
553
50%
1,750
1,100
63%
2,600
975
40%
th
Source: MOSL **13 plan capex by PGCIL assuming a 50% share in ISTS
th
Exhibit 7: 11 – 13 plan transmission capex (FY08-22e)
INR m
11th Plan
12th Plan
13th Plan
Inter State(400/765kv/HVDC)
550
1,200
1,300
Intra State (220kv, 400kvv)
562
550
1,300
1,112
1,750
2,600
57%
49%
118%
8%
Total transmission capex
YoY Growth (%)
Inter- state transmission system growth (%)
Intra state transmission system growth (%)
Generation capacity addition – incl. renewables (MW)
Growth vs. previous plan (%)
67,926
-2%
136%
120,000
100,000
77%
-18%
Source: CEA, MOSL
ISTS spending growth would slow down to 8% in the 13th Plan from 118% seen in the
12th Plan. Intra-state spending would jump 136% over the 12th Plan as states step up
spending to upgrade their networks to align with inter-state transmission corridors.
Large growth in ISTS during the 12th Plan was driven by the INR670bn spending on
setting up nine High-Capacity Transmission Corridors (HCTCs), which have been set
up to link the generation plants.
A slowdown in ISTS spending along with higher state spending has the following two
repercussions for the sector:


February 2016
With intra-state spending rising 136% to INR1.3t, states will need to step up
their spending requirements in building transmission capacity. PGCIL has already
started working with states to help them upgrade their existing infrastructure
(JVs formed with Bihar and Orissa); this can be either done through spending by
the states themselves or via the PPP route.
Not only is PGCIL required to win ISTS projects on tariff-based bidding going into
the 13th Plan, the spending growth on such projects is also seen slowing down
(8% in the 13th Plan v/s 118% in the 12th Plan); this implies that PGCIL will need
7
Capital Goods | Transmission

February 2016
to diversify its growth areas (in distribution and smart grid) to keep up its
momentum.
Focus will shift away from PGCIL ordering to state level orders since states
would need to increase their spending on upgrading their respective networks.
Working with different states vs. working only with PGCIL has its own set of
challengers including an elongated working capital cycle, multiple customers vs.
a single customer(PGCIL) but we are given to understand that competition in
state level projects are lower than PGCIL projects.
8
Capital Goods | Transmission
So what does it mean for transmission players?
Focus now shifts to the state transmission capex
We expect a big jump in spending from the states on intra-state transmission and on
HVDC lines while capex in the 765kv/400kv segment (transformers, lines,
substations) will slow. Since state level spending would primarily be on the 220kv
level, we expect higher competitive intensity (versus 400/765kv) for orders as the
number of players participating would be higher.
Our estimate for equipment and voltage-wise spending during the 13th plan is
discussed below:

Transformers: Based on transformation capacity addition of 288,000MVA
(220kv and above), total spending on transformers in the 13th plan is expected
to be up 7% v/s the 12th Plan and 92% v/s the 11th Plan. More importantly,
transformer capex is likely to decline in the 765kv segment (INR24b, -47% YoY)
and increase in the 400kv (INR15bn, +9%) in the 13th plan. Orders for 1200kv
transformers are likely to start flowing only toward the beginning of the 14th
Plan (2023 onwards). The 220kv segment is likely to see a sharp jump of 111% in
the 13th Plan to INR48b (v/s +10% in the 12th Plan) as states upgrade their
transmission network. Most players that are strong in the 400/765kv
transformers have not been very aggressive in the 220kv segment, which has
historically seen more competition and is a more commoditized market.
Exhibit 8: Transformer capacity(MVA) across the industry in transmission and distribution
Company Name
ABB Ltd.
20,410
Alstom T & D India Ltd.
25,075
Crompton Greaves Ltd.
40,000
Siemens Ltd.
15,000
TBEA Shenyang
15,000
Bharat Heavy Electricals Ltd.
45,000
TRIL
33,200
Bharat Bijlee Ltd.
15,000
Emco Ltd.
20,000
Indo Tech Transformer Ltd.
7,450
Voltamp Transformers Ltd.
13,000
Schneider Electric
Sub- Total
Organized as a proportion of total
Total Industry capacity
Growth YoY (%)
February 2016
FY15
7,000
256,135
65%
394,054
0%
Source: MOSL, Company
9
Capital Goods | Transmission



February 2016
Transmission lines: Transmission line capex is likely to rise 36% to INR1440b in
the 13th Plan (+91% in the 12th plan), driven by a surge in capex in 220kv and
HVDC lines. Spending in 765kv and 400kv transmission lines would decline 9% to
INR574b. Spending for intra-state transmission in the 220kv lines is likely to be
INR600b (+145%) while HVDC lines are likely to witness spending of INR265bn
(+42%). Clearly, state spending on transmission lines is expected to pick up
substantially.
Substation: Overall substation capex is expected to be INR980bn in the 13th
Plan (+32% over the 12th Plan), driven by spending on HVDC and 220kv
substations. Spending on 220kv substations is likely to be INR400bn (+111% over
the 12th Plan) while HVDC substation spending is pegged at INR195b in the 13th
Plan (+39% over the 12th Plan). Cumulative spend on 765/400kv substations is
seen declining 7% over the 12th Plan to INR384b.
HVDC Substations: Four large HVDC terminals (as mentioned below) are
envisaged during the 13th Plan, with a total 15GW capacity and estimated
spending of INR195b (+39% over the 12th Plan).
 Champa Kurukshetra Phase 2 (3GW): Work to start from Q4FY16-Q117 and
likely to commission by FY18. The order has been awarded to Alstom SA for
INR33b and Alstom T&D’s share in the order is INR14.5b.
 Chhattisgarh (Raigarh) to Tamil Nadu (6GW): Tenders already issued and
likely to be ordered by Q4FY16/Q117. The project has been given to PGCIL
on nomination basis and the cost is INR200b. We estimate HVDC’s portion
of the order at ~INR70-75bn. Three bidders have submitted bids for the
order— ABB, Siemens and Alstom SA. This line could be extended to Kerala
for evacuating another 3GW of power.
 Orrissa to Badarpur (3GW): Still in the planning stage.
 Assam (Rangia/Rowta) to Punjab (3GW): Still in the planning stage
10
Capital Goods | Transmission
th
Exhibit 9: Transmission capacity addition and capex over 11-13 plan (2008-2022e)
Description
Transmission Lines (>220kv ckm
HVDC Bipole lines
765kv
400kv
220kv
Total
HVDC terminal
HVDC back-to-back
HVDC Bipole terminals
HVDC Terminal Capacity, MW
10th Plan
end
11th plan
addition
11th plan
end
Current
(Dec,15)
12th plan
addition
12th Plan
end
13th plan
addition
13th Plan
end
5,872
2,184
75,722
114,629
198,407
3,560
3,066
31,097
21,351
59,074
9,432
5,250
106,819
135,980
257,481
9,432
23,789
144,067
155,666
336,460
7,440
27,000
38,000
35,000
107,440
16,872
32,250
144,819
170,980
364,921
10,600
22,200
30,000
85,714
148,514
27,472
54,450
174,819
256,694
513,435
3,000
5,000
8,200
1,750
1,550
3,000
6,750
9,750
3,000
12,000
15,000
12,750
12,750
3,000
19,500
22,500
15,000
15,000
3,000
34,500
37,500
92,942
156,497
249,439
25,000
58,085
67,277
150,362
25,000
151,027
223,774
399,801
133,500
201,117
283,439
618,056
149,000
45,000
76,000
270,000
174,000
196,027
299,774
669,801
79,000
49,000
160,000
288,000
253,000
245,027
459,774
957,801
AC Substations capacity
765 kV
400 kV
220kv
Total- AC Substation capacity, MVA
Transformer capex
765kv
400kv
220kv
Total capex
YoY Growth(%)
Transmission line capex
HVDC Bipole
765kv
400kv
220kv
Total transmission line capex
YoY Growth (%)
% of total transmission capex
Substation spending (Rs Mn MVA)
HVDC Bipole/ Back to back
765kv
400kv
220kv
Total
YoY Growth (%)
% of total transmission capex
February 2016
7,500
17,426
20,183
45,109
44,700
13,500
22,800
81,000
80%
23,700
14,700
48,000
86,400
7%
89,000
45,990
248,776
170,808
554,574
186,000
324,000
304,000
245,000
1,059,000
91%
61%
265,000
288,600
285,000
600,000
1,438,600
36%
55%
50%
19,250
75,000
145,213
168,193
407,655
37%
140,250
298,000
112,500
190,000
740,750
82%
42%
195,000
237,000
147,000
400,000
979,000
32%
38%
Source: CEA, MOSL
11
Capital Goods | Transmission
th
Exhibit 10: HVDC lines planned (11–13 Plans)
Description
Type
Agency
Chandrapur-Padghe (Alstom)
Rihand-Dadri (Siemens)
Talcher-Kolar
Balia-Bhiwadi
Biswanath-Agra (ABB)
Champa– Kurukshetra (Alstom)
LILO of Bishwanath Chariyalli– Agra at
Alipurduar(ABB)
Mundra -Mohindergarh (Siemens)
Champa - Kurukshetra - II (Alstom)
Chhatisgarh -Tamil Nadu
Orrisa - Badarpur +/-800kv HVDC
Assam(Rangia/Rowta) Punjab(Gurdaspur) +/-800kv
Sub-total (bipole)
bipole
bipole
bipole
bipole
bipole
bipole
MSEB
PGCIL
PGCIL
PGCIL
PGCIL
PGCIL
bipole
PGCIL
bipole
bipole
bipole
Bipole
Adani
PGCIL
PGCIL
NA
Bipole
NA
Vindhyachal
Chandrapur (Alstom)
Gazuwaka
Sasaram (Alstom)
Sub-total (b-to-b)
TOTAL – HVDC Terminal Capacity, MW
b-to-b
b-to-b
b-to-b
b-to-b
PGCIL
PGCIL
PGCIL
PGCIL
th
10
Plan end
1,500
1,500
2,000
Expected at
11th
12th/early the end of
Plan end 13th Plan 12th/early
13th Plan
1,500
1,500
500
2,500
13th
plan
End of
13th Plan
3000
3000
1,500
1,500
2,500
2,500
3000
3000
1,500
1,500
2,500
2,500
3,000
3,000
3000
3000
3,000
2,500
2,500
2,500
3,000
6,000
3,000
6,000
3,000
5,000
10,500
500
1,000
1,000
500
3,000
8,000
500
1,000
1,000
500
3,000
13,500
9,000
19,500
15000
19,500
9,000
500
1,000
1,000
500
3,000
22,500
500
1,000
1,000
500
3,000
15,000
22,500
Source: MOSL
th
Exhibit 11: Inter-regional transmission capacity (MW) envisaged until the 13 Plan
Transmission Corridor(MW)
East- North
East - West
East - South
East- North East
West - North
West - South
North East - North
Total
Addition in capacity over the plan period (in MW)
10th Plan
end
11th Plan
end
Existing
(Jan, ’16)
12th Plan
balance
3,430
1,790
3,130
1,260
2,120
1,720
14,050
10,030
4,390
3,630
1,260
4,220
1,520
25,650
11,600
15,830
12,790
3,630
2,860
12,920
7,920
1,500
47,450
2,100
4,200
4,000
4,500
22,700
End of 12th 13th Plan
Plan
addition
17,930
12,790
7,830
2,860
16,920
7,920
6,000
72,250
46,600
8,800
8,400
4,200
15,600
14,400
3,000
54,400
End of 13th
Plan
26,730
21,190
12,030
2,860
32,520
22,320
9,000
126,650
54,400
Source: CEA, MOSL, Note INR1.2trn spend in 12th plan and INR1.3trn in 13th plan
February 2016
12
Capital Goods | Transmission
Exhibit 12: Company-wise presence across the transmission value chain
Name of company
Transmission Line
BHEL
L&T
√
Substation
Transformer
√
√
√
ABB India
√
√
Siemens India
√
√
Crompton Greves
√
√
Alstom T&D India
√
√
KEC International
√
Conductor
√
Kalpataru Power
√
√
Techno Elctric
√
√
Jyoti Structures
√
√
Skipper Ltd
√
Voltamp
√
Bharat Bijlee
√
TIL
√
Ino Tech Tansformer
√
Sterlite Technologies
√
Source: MOSL
Exhibit 13: Inter-regional transmission links planned till FY22e
Source: CEA
February 2016
13
Capital Goods | Transmission
Higher voltage and new technologies the way forward in
transmission
Advantage MNC T&D players as limited competition
The Indian transmission network (>132kv) has been continuously moving toward
higher voltages and new technologies. Currently, transmission lines are primarily run
at 400/765kv voltage levels; PGCIL intends to move to 1200kv in the 14th Plan. Intra state transmission networks are being upgraded from 132kv level to 220/400kv.
Higher voltages lead to more efficient transfer of power while using lesser space
New technologies being adopted to make the grid more reliable and efficient
include HVDC, dynamic compensation, PMU based technology/wide-area
monitoring system (WAMS), phase shifting transformers, series reactors, and
1200kV UHVAC.
Below we discuss a few details about these technologies:
 HVDC: A high-voltage, direct current (HVDC) electric power transmission system
uses direct current for the bulk transmission of electrical power instead of the
more common alternating current (AC) systems. HVDC are less expensive for
long-distance transmission and suffer lower electrical losses.
Exhibit 14: Advantages of shifting to higher voltage levels
Voltage Level
ROW Meters(M)
Capacity (MW)
+800 kV
HVDC
HVDC
64
46
70
90
500-600
2500-3000
2000-2500
6000-6400
6000-8000
15
45
48
220 kV
400 kV
765 Kv
27
35
52
70-80
160-170
3
5
MW/m




February 2016
+500 kV
132 kV
1200 kV
90
90
Source: CEA, MOSL
SVC/STATCOM. To maintain voltages within limits and grid stability,
STATCOM/SVC are required as dynamic compensators. A static synchronous
compensator (STATCOM) is a regulating device used on alternating current
electricity transmission networks; when connected to a source of power, it can
also provide active AC power. PGCIL is looking to order a total of 14 SVC’s with
two already ordered out (Siemens and Techno Electric/Rongxin)
Wide Area Monitoring System (WAMS). The Indian power systems’ dimensions
and complexity are increasing, which necessitates better visibility of the grid
system. The dynamic behaviour of a power system can be observed on almost a
real-time basis at the control centre, thereby improving/enhancing situational
awareness for operators and increasing the grid’s deliverability.
Phase Shifting Transformers. Phase shifting transformers (PST) help control the
real power flow in transmission lines and systems inter-ties and allow for better
utilization of existing networks by balancing the loading in parallel paths.
Reactors. To meet the growing power generation (necessitated due to rising
demand), new lines are being added—this has resulted in an increase in
instances of short circuit. Series reactor has been considered for limiting the
occurrence of fault current and the resulting short circuit.
14
Capital Goods | Transmission

1200kV UHVAC technology. Power Grid has lead the way in establishing 765kV
AC technology for high-capacity transmission corridors in the past few years.
However, in view of the growing right-of-way concerns, there is a need for
augmenting transmission of power in a given right-of-way. Therefore, the
world’s highest transmission voltage level of 1200kV UHV-AC was established in
India in 2012 with the charging of National Test Station at Bina in MP..
Exhibit 15: Indian grid moving toward higher voltage levels over the years
Year
Voltage
1950
220
1960
220
1970
220
1980
220
1990
400
2000
500kv DC
2007
765kv Ac
2010
800kv Dc
2023e
1200 kv Ac
Source: CEA, MOSL
With most of the incremental transmission capacity likely to be put up at high
voltages (765/400kv), the player-wise capabilities across various equipment types is
listed below.
Exhibit 16: Capabilities across high-voltage equipment
Name of Company
765kv
1200kv
transformer transformer
HVDC
StatCom
400/765kv
400kv
765kv
AIS
GIS
GIS
PMU
ABB India
Y
Y
Y
Y
Y
Y
Y
Y
Siemens India
Y
Y
Y
Y
Y
Y
Y
Y
Alstom T&D India
Y
Y
Y
Y
Y
Y
Y
Y
Toshiba India
Y
Y
Y
N
Y
Y
Y
NA
TBEA Shenyang India
Y
Y
N
N
N
N
N
N
Crompton Greaves
Y
Y
N
N
Y
Y
N
N
Hyosung
Y
Y
N
N
Y
Y
Y
N
Source: CEA, MOSL
Exhibit 17: Company wise exposure to the transmission sector
Name of Company
55%
Siemens India
25%
Alstom T&D India
Crompton Greaves
100%
25%-30%
BHEL
5-7%
L&T
8-10%
KEC international
February 2016
% of total sales
ABB India
70%
Source: MOSL,** includes export sales and overseas markets as well
15
Capital Goods | Transmission
Competitive intensity lower post implementation of
domestic manufacturing clause
To promote the government’s ‘Make in India’ initiative, PGCIL has already put in
place stringent norms to force equipment suppliers to set up factories in India. Even
before the current push, PGCIL inserted a domestic manufacturing clause for its
765kv transformers—which led to companies (Alstom T&D, ABB, and TBEA
Shenyang) setting up factories at Baroda over the last 5-6 years.
As highlighted in the chart below, PGCIL has expanded the domestic manufacturing
clause across equipment types; this could lead to more Chinese/Korean companies
setting up shop in India. Media reports indicate that Baoding (Chinese transformer
manufacturer) has started constructing a 10,000MVA transformer facility at Baroda
while Hyosung (Korean GIS manufacturer) is putting up a switchgear factory near
Pune.
Source: PGCIL
The Make in India clause benefits local players in two ways:
 It weeds out non-serious players who were previously importing and dumping
equipment from their overseas factories. This is in turn implies a bigger pie for
existing players and is very evident in the case of 765kv transformers where
Koreans have completely left the market after PGCIL imposed the domestic
clause.
 Improves pricing for locally made equipment as the domestic players have a
more level playing field versus foreign competition (read Chinese and Korean
players).
February 2016
16
Capital Goods | Transmission
765kv transformers - competition down on domestic manufacturing clause
In order to promote domestic manufacturing of 765kv transformers, PGCIL had
introduced a mandatory supply of transformer from the Indian factory of the
vendor. This was needed since a transformer has to run for 20-25 years and there
had been a surge in imports of 765kv transformers from Korea and China.
As we highlight in the chart below, the Koreans had a 22% market share in 765kv
transformers while the Chinese had a 44% share in FY10; in FY12, the share of
Korean manufacturers came down to 2% and since then have completely exited the
market since they were not willing to set up a transformer plant. Similarly, Chinese
transformer manufacturers Baoding and Xian have also exited the market as they
are not able to meet qualification norms as above.
This has led to just 4-5 players participating in 765kv transformer bids from PGCIL
namely, Alstom T&D, TBEA Shenyang, ABB India, Siemens India, and Crompton
Greaves. With no new players expected to set up a factory in India, we expect the
competition to be limited to these players.
Exhibit 18: Market share in 765kv transformers – Power Grid
34%
43%
Korean
Chinese
53%
46%
Indian
87%
44%
22%
2009-10
77%
86%
27%
30%
2010-11
46%
54%
2%
2011-12
0%
2012-13
13%
0%
2013-14
23%
0%
2014-15
14%
YTD'16
Source: PGCIL, MOSL
765kv substations – impact yet to be seen
Within 765kv substations, we note that historically the Indian players had a
dominant share. However, there has been a shift of share towards the
Koreans/Chinese over the past two years. This is primarily due to PGCIL moving
towards award of GIS substations versus AIS earlier; ~65-70% of substation orders in
FY15/YTD’16 have been for GIS. YTD FY16, Korean player Hyosung had a 44% share
in the 765kv substation market at the expense of Indian players.
We understand that PGCIL has introduced a domestic manufacturing clause in 765kv
GIS equipment as well – this requires that at least one bay needs to be made from a
factory in India. This effectively means that vendors would need to set up a factory
in India. Hyosung, which is the only Korean player in this segment, is looking to set
up a 765kv GIS factory near Pune. Amongst the Chinese, North East Electric and
Pinggao Group have been quite aggressive in this market. These two players would
also have to set up a manufacturing base in India in order to continue supplies to
PGCIL – if not, they would have to exit the market.
February 2016
17
Capital Goods | Transmission
Exhibit 19: Market Share in 765kv substations - PGCIL
Korean
Chinese
Indian
23%
100%
100%
82%
96%
25%
53%
2009-10
2010-11
4%
2011-12
37%
23%
63%
12%
6%
2012-13
2013-14
33%
2014-15
44%
YTD'16
Source: PGCIL, MOSL
Within the substation segment, PGCIL has been increasingly moving towards GIS
substation with ~60-70% of substation orders during FY15 and YTD FY16 have been
for GIS substations (400/765kv). The Chinese (North East Electric Group, Xian and
Pinggao Group) together had a 35% share while Hyosung had another 50% share in
orders YTD’16.
Exhibit 20: GIS substation market share – PGCIL (%)
Korean
Chinese
18%
49%
33%
2014-15
Indian
15%
35%
50%
YTD'16
Source: PGCIL, MOSL
Transmission lines – consolidation is evident
While there is no domestic manufacturing clause there for transmission line
companies, PGCIL has over the past two years tried to restrict the bidders to only
serious players who are able to execute on time. Vendors who have won orders
earlier but not able to execute on time are not being technically qualified and
therefore not able to participate in the financial bids.
We note that PGCIL works on a regulated model where it gets a fixed ROE on
capitalized assets – however, it does not earn anything on CWIP. A consistent delay
in the execution of projects leads to higher CWIP and therefore PGCIL took the
decision to prune its vendor list to only the serious bidders who have the requisite
experience in execution of projects.
There is a clear consolidation in the market share of players – the top four players
now account for ~75% of the orders awarded by PGCIL during YTD’16. We highlight
the period during FY11-FY12 when a large number of new players jumped into the
transmission EPC fray – this was also on account of a sharp slowdown in orders in
other infrastructure projects. However, since then we have seen quite a few of
these players exit post not being able to execute the projects on time or have been
February 2016
18
Capital Goods | Transmission
black listed by PGCIL and therefore their financial bids are not being opened. This
has led to a consolidation in the existing players who have proved their execution
capability.
Exhibit 21: Transmission lines market share – PGCIL
Bajaj Electrical
Gammon India
EMC
Kalpataru Power
KEC International
L&T
TATA Project
Others
100%
75%
50%
25%
0%
FY09
February 2016
FY10
FY11
FY12
FY13
FY14
FY15
YTD'16
19
Capital Goods | Transmission
Tariff-based bidding for transmission projects
Preference for vendors with established track record
The Electricity Act, 2003 opened up the transmission sector to private sector
participation subject to obtaining a transmission license. The act provides for
transmission licenses by the CERC and SERC and for determination of tariffs under
section 61/62 through competitive tariff-based bidding. A model transmission
agreement (MTA) was also notified in May, 2012.
All new transmission lines (inter- state) shall be ‘bid out’ from January 2011 and
only lines that are of national interest shall be given to Power Grid on a nomination
basis. All intra-state transmission networks to have tariff-based competitive bidding
(TBCB) from January 1, 2013.
There are two ways for ‘bidding out’ the transmission networks: (1) Model
transmission agreement using the lowest VGF/grant as notified by the Planning
Commission or (2) the Standard Bidding Documents (SBD) as notified by the Ministry
of Power. For most of the inter-state transmission projects PFC/REC use the SBD
method while some states have used the VGF model as notified by the Planning
Commission.
Exhibit 22: Procedure for bidding out of transmission projects on tariff based bidding



Project approval by empowered committee
Bid process coordinator selected (PFC and REC)
RFQ notification and bid invitation
Bidder 1 / 2 / N



Response to RFQ submission and evaluation by BPC
Selection of qualified bidders. Issuance of RFP to selected
bidders
(a) Responsiveness check, (b) Compliance with submission
requirements, (c) Evaluation of qualifying requirements
Bidder 1 / 2 / N



Annual transmission charges quoted for the contract years
(35 years) in the RFP
Transmission charges levelized over a period from the
scheduled COD of the project up to 35 years
Project awarded to L1 (lowest) bidder
CERC
Source: CERC, MOSL
February 2016
20
Capital Goods | Transmission
PGCIL has got 11 projects out of the 20 that it had originally bid for, which implies a
~50% market share in such projects. PGCIL was also awarded projects worth
INR360b (lowered to INR260b) on a nomination basis by the government; of these,
the INR260b Raichur-Pugular HVDC line project was done on Tamil Nadu’s
insistence, as the state wanted this line to come up on time.
Developers prefer EPC players/equipment manufacturers with established
track record
Competitive intensity was quite high in the initial tariff-based projects with 10-15
players participating in bids. However, in recent bids, the number of players
declined to 5-7; it seems that most players have realized that executing the projects
is not easy because of right-of-way and clearance-related issues that developers
face.
As per our discussion with project developers as also our utilities analyst, levelized
tariff needs to be in the region of 13%-18% of project cost to earn 10%-28% ROE.
This is also evident from CERC recommended tariff which typically are in the same
range and assume a fixed ROE of 15.5% (See table on next page for detailed project
wise breakup).
The two key components in tariff based bidding, in our view are:


February 2016
Capital Cost of the project – This would depend not only on the equipment and
the related construction costs but also timely completion of the project. Quite a
few times, the project developers tie up with the equipment suppliers/EPC
players to lock in the capital cost of the project and then use this arrive at the
bid tariff. We note that the project IRR’s/ROE’s are dependent on timely
execution and delays could led to costs escalation and a fall in expected
IRR’s/ROE. This would imply the project developers would like to stick to
equipment manufacturers/EPC players who have a proven execution record
both in terms of reliability o equipment and timely completion as per deadlines.
Our discussions with a few private transmission developers indicate that they
would prefer to stick with Indian equipment manufacturers since the
transmission line has to be run for 35 years and an equipment failure could lead
to penalties.
Interest cost – This would depend on the credit worthiness of the developer as
also whether the borrowing is domestic or international. PGCIL has the benefit
of lower interest costs given its high credit ratings.
21
Capital Goods | Transmission
Exhibit 23: Transmission project awarded on tariff based bidding
Project
State
East North Interconnection
transmission project
Assam, West Bengal &
Sterlite Technologies
Bihar
Madhya Pradesh &
Sterlite Transmission Projects
Chhattisgarh
Gujarat, Madhya Pradesh
Sterlite Transmission Projects
& Maharashtra
Tamil Nadu
PGCIL
Techno Electric and
Haryana
Engineering
Jabalpur Transmission project
Bhopal Dhule Transmission Co Ltd
Nagapattinam-Madhugiri
Patran Transmission Co. Ltd.
Transmission System for Part ATS of
Rajasthan
RAPP U-7 & 8
Eastern Region System
West Bengal, Jharkand
Strengthening Scheme-VII
Darbhanga-Motihari - ERSS VI
Talcher-II Transmission Co Ltd
Odisha , AP
North Karanpura Transmission Co Uttar Pradesh , MP,
Ltd
Chhatisgarh, Haryana
Raichur Sholapur Transmission Co
Karnataka
Ltd
Vemagiri A Transmission System Ltd Andhra Pradesh
Vizag Transmission Ltd
NA
Kudgi Transmission Ltd
NA
NRSS XXIX
NA
NRSS XXXI (A)
NA
NRSS XXXI (B)
NA
WRSSS-II Project B (Maharashtra) Maharashtra
WRSSS-II Project C (Gujarat)
Gujarat
Transmission system for 1320MW
Haryana
Jhajjar TPP
Bikaner-Deedwana-Ajmer-Sujangarh
Rajasthan
transmission
Hindaun -Alwar Transmission line Rajasthan
765kV S/C Mainpuri-Bara line with
Uttar Pradesh
765/400kV AIS at Mainpuri
765kV S/C Mainpuri -Hapur &
Mainpuri -Gr Noida lines with
Uttar Pradesh
765/400kV AIS at Hapur & Gr Noida
Unchahar Transmission
Uttar Pradesh
NCC Project
Andhra Pradesh
Vindhyachal V Transmission
Madhya Pradesh
Strengthening Scheme
Gadarwara STPS (2 x 800 MW) of
Madhya Pradesh
NTPC (Part A)
Gadarwara STPS (2 x 800 MW) of
Madhya Pradesh
NTPC (Part B)
Maheshwaram (Hyderabad)
Andhra Pradesh
765/400 kV Pooling S/s
Additional System Strengthening
Madhya Pradesh
Scheme, Sipat
Chattisgarh (A) transmission project Chattisgarh
Chattisgarh (B) transmission project Chattisgarh
Vemagiri II transmission line
Andhra Pradesh
400kv D/C Bikaner to Sikar
Rajasthan
Bhutan Interlink - Alipurduar Project Bhutan to East India
February 2016
Developer
Award
Date
Project Levellised
cost Revenue
(INR m)
(L1)
CERC
tariff
Tariff as
% of cost
Jan-10
8,000
1,188
15%
Jan-11
13,000
1,421
11%
Jan-11
19,000
1,995
11%
Mar-12
10,250
987
10%
2,000
274
14%
Sterlite Grid
Sep-13
3,100
365
12%
Sterlite Grid
Sep-13
4,500
589
13%
Essel Infraprojects Ltd
PGCIL
Dec-09
9,347
14,000
1,174
1,440
13%
10%
PGCIL
Dec-09
27,000
2,580
10%
Patel Engg, Simplex Infra &
BS Transcomm
PGCIL - discontinued
PGCIL
L&T IDPL
Sterlite Grid
PGCIL
Essel Infraprojects Ltd
Reliance Infra
Reliance Infra
Kalpatru Power & Techno
Electric
Dec-10
4,400
293
Mar-12
Jul-13
Jul-13
May-14
Feb-14
Jan-14
Nov-07
Nov-07
13,000
12,777
13,500
25,000
4,000
6,780
9,736
4,064
1,197
2,311
1,796
4,377
594
887
Apr-10
4,500
540
GMR Energy
Oct-10
2,000
NA
GMR Energy
Isolux Corsan Concesiones
S.A.
Oct-10
574
NA
Jul-11
55,000
8,700
16%
Cobra-MEIL Consortium
May-11
45,000
8,750
19%
PGCIL
PGCIL
Mar-14
1,200
10,000
167
1000
191
14%
10%
PGCIL
Feb-15
12,000
2,109
4,214
18%
PGCIL
Feb-15
25,250
2,901
5,935
11%
PGCIL
Feb-15
23,600
2,568
5,268
11%
Strelite Grid
Jul-15
3,960
550
14%
Adani Power
Jul-15
8,630
790
9%
Adani Power
Adani Power
PGCIL
KEC International
Kalpataru Power
Jul-15
Jul-15
Oct-15
Oct-15
Oct-15
8,230
19,760
63,000
2,600
18,000
1,324
1,780
3,590
294
1,294
537
2,369
2,328
4,175
923
7%
9%
18%
13%
18%
15%
13%
NA
NA
12%
16%
9%
6%
11%
7%
Source: MOSL, PFC
22
Capital Goods | Transmission
To level the playing field for the private sector vis-à-vis PGCIL, the government is
looking to initiate several other measures. The measures include separation of
POSOCO from PGCIL—POSOCO is in charge of five regional and central load dispatch
centers. Another move being planned is to have an independent company for
collection of transmission charges from states—currently, this is being done by
PGCIL.
Exhibit 24: Changing dynamics in the transmission sector
Description
Earlier
Current/Proposed
Grid Construction
PGCIL - award on nomination basis
PGCIL and Private players
Grid Control
PGCIL
POSOCO hived off from PGCIL to control grid
Collection of transmission charges
PGCIL
New company to be formed for collection of transmission charges
Source: Industry, MOSL
February 2016
23
Capital Goods | Transmission
Planning the transmission system
State-wise demand-supply gap rolled up to pan-India level
A pickup in the pace of generation capacity addition (primarily from the private
sector),the higher distance between source of generation and end-users along with
power trading has led to a greater need for a robust transmission system. The 2012
northern region blackout has brought the focus back on having a reliable and
dependable system that can withstand the load demand of various regions and
states.
Assessment the key to planning
State - and region-wise import and export scenarios are assessed by using the
available pipeline of generation plants (projected to come up in the 12th and 13th
Plans); after this, to meet possible import/export requirements, a projection of the
additional transmission system is made by using CEA’s system studies. The 18th
Electric Power Survey is used as the basis for demand projection by each
state/region for the 12th and 13th Plans.
The transmission network is planned in a way that it meets peak load demand
across seasons. On a pan-India basis, base load is ~70% of peak load—up to 80%
load is present 50% of the time and peak period of 90-100% load only 5% of the
time, as per CEA.
Modeling the transmission system for 12th and 13th Plans (2013-2022)
The transmission system requirement is modelled at the state level, following which
it is aggregated at the regional level and then at the national level. In any given
state, there can be state-sector generation tied up completely to the host state,
central-sector generation serving more than one state, and power plants belong to
state-sector and inter-state IPPs.
Each state has its own power demand. Power availability from all the sources in a
state minus its own demand gives net import or export of that state. The
aggregation of import/export requirement of states within a region, and taking into
consideration the diversity factor, translates into inter-regional power transfer
requirements. The transmission system is planned to cater to the inter-state and
inter-regional power transfer requirements. While planning the inter-state
transmission system, the diversity in demand has to be also kept in mind.
February 2016
24
Capital Goods | Transmission
Exhibit 25: Planning methodology
Source: CEA, MOSL
As per the Electric Power Survey, peak demand would rise to ~200GW by the end of
the 12th Plan (FY17) and to 284GW by the end of the 13th Plan (FY22) from 130GW
by the end of the 11th Plan. The peak demand by FY22 will be more than double the
load as at the end of the 11th Plan.
Exhibit 26: Regionwise peak power demand
th
th
12 plan
13 plan
Plan growth
(2016-17)
(2021-22)
(%)
NR
60,934
86,461
7%
WR
62,015
86,054
7%
SR
57,221
82,199
8%
ER
24,303
35,928
8%
2,966
4,056
6%
Andaman & Nicobar Island
67
89
6%
Laskhwadeep
11
18
10%
199,540
283,470
Region wise peak demand/load
NER
All India
7%
Source:CEA, MOSL
Demand is estimated to grow by 9% in the 12th Plan and 7% in the 13th Plan; this
implies electricity demand growth of 1.0x-1.5x GDP growth during the period.
Transmission system planning is done is a way that it is able to meet the estimated
peak and off-peak load demand in the system.
Installed capacity as at end of 12th and 13th Plans
After determining the peak demand by the end of the 13th Plan, it is important to
understand the installed generation capacity by state/region in the same period.
The knowledge would help understand the surplus/deficit situation for each state
and, therefore, the resultant need for ISTS.
As per the CEA, capacity added till Dec, 15 of the 12th Plan was ~72GW and a total of
~120GW could be added (inclusive renewable energy sources of 25GW) during the
plan period. Another 100GW would be added during the 13th Plan to take the total
installed capacity (including renewables) to 430GW by FY22.
February 2016
25
Capital Goods | Transmission
th
th
Exhibit 27: State wise projection of demand for 12 and 13 Plans (MW)
State/UTs
2011-12
2016-17
CAGR(12th Plan)
2021-22
CAGR (13th Plan)
Delhi
5,031
6,398
5%
9,024
7%
Haryana
6,533
10,273
9%
14,244
7%
Himachal Pradesh
1,397
1,900
6%
2,589
6%
Jammu & Kashmir
2,385
2,687
2%
4,217
9%
10,471
12,342
3%
14,552
3%
8,188
13,886
11%
19,692
7%
12,038
23,081
14%
36,061
9%
Uttarkhand
1,612
2,189
6%
2,901
6%
Chandigarh
263
426
10%
559
6%
40,248
60,934
9%
86,461
7%
527
815
9%
1,192
8%
10,951
19,091
12%
26,973
7%
6,599
7%
Punjab
Rajasthan
Uttar Pradesh
Northern Region
Goa
Gujarat
Chhattisgarh
Madhya Pradesh
4,687
9,151
13,904
9%
18,802
6%
21,069
28,645
6%
39,622
7%
D. & N. Haveli
615
944
9%
1,297
7%
Daman & Diu
301
441
8%
605
7%
Western Region
42,352
62,015
8%
86,054
7%
Andhra Pradesh
14,054
22,445
10%
33,194
8%
Karnataka
10,545
13,010
4%
18,403
7%
3,516
4,669
6%
6,093
5%
Tamil Nadu
12,813
20,816
10%
29,975
8%
Puducherry
335
630
13%
782
4%
Maharashtra
Kerala
Southern Region
37,599
57,221
9%
82199
8%
Bihar
2,031
5,018
20%
9,306
13%
Jharkhand
1,030
4,616
35%
6,341
7%
Orissa
3,589
5,672
10%
6,749
4%
West Bengal
6,592
11,793
12%
17,703
8%
100
144
8%
176
4%
14,707
24,303
11%
35,928
8%
1,112
1817
10%
2,534
7%
Sikkim
Eastern Region
Assam
Manipur
116
346
24%
497
8%
Meghalaya
319
445
7%
596
6%
Nagaland
111
185
11%
271
8%
Tripura
215
340
10%
472
7%
Arunachal Pradesh
121
135
2%
177
6%
82
285
28%
352
4%
1,920
2,966
9%
4,056
6%
89
6%
18
10%
Mizoram
North Eastern Region
Andaman & Nicobar Islands
67
Lakshadweep
All India
February 2016
11
130,006
199,540
9%
283,470
7%
Source:CEA,MOSL
26
Capital Goods | Transmission
th
th
Exhibit 28: Installed capacity by the end of 12 and 13 Plans
Generation
Region
11th Plan End
Demand
Addition in 12th Addition in 13th
Total (End of
Plan
Plan
13th Plan)
Present
12th Plan
13th Plan
NR
54,467
30,849
16,890
102,206
45,934
60,934
86,461
WR
66,064
52,492
20,262
148,818
41,335
62,015
86,054
SR
55,821
20,061
23,076
118,958
39,015
57,221
82,199
ER
29,761
16,858
31,195
77,813
15,888
24,303
35,928
NER
Total
2,884
3,537
8,202
14,623
2,164
2,966
4,056
208,996
120,011
99,625
430,418
1,35,918
199,540
283,470
2021-22 load generation balance report
The load generation balance report at the end of the 13th Plan indicates that
northern region would have a deficit of ~19-22GW while the southern region would
have a deficit of 13-19GW. The surplus in the western region is pegged at 12-16GW.
Thus, power from surplus regions will need to be carried into deficit regions.
Exhibit 29: India Summer peak inter-regional flows (In MW)
Source: CEA
February 2016
27
Capital Goods | Transmission
Key inter-regional transmission corridors
Accounting for the deficit/surplus in various regions, the inter-regional transfer
capacity is seen increasing to 127GW by the end of the 13th Plan (FY22) from 48GW
currently. A total of 148,514ckms of transmission line, 15,000MW of HVDC terminal
capacity and 271,000MVA of transformation capacity of >220kv would need to be
set up in the 13th Plan (2017-22).
th
Exhibit 30: Inter-regional transmission capacity (MW) envisaged until the 13 Plan
10th Plan
11th plan
Existing
12th plan
end
end
(Jan, ’16)
addition
plan
addition
East- North
3,430
10,030
15,830
2,100
17,930
8,800
26,730
East – West
1,790
4,390
12,790
-
12,790
8,400
21,190
East – South
3,130
3,630
3,630
4,200
7,830
4,200
12,030
East- North East
1,260
1,260
2,860
-
2,860
-
2,860
West – North
2,120
4,220
12,920
4,000
16,920
15,600
32,520
West – South
1,720
1,520
7,920
-
7,920
14,400
22,320
-
-
1,500
4,500
6,000
3,000
9,000
14,050
25,650
47,450
22,700
72,250
54,400
126,650
Transmission Corridor(MW)
North East – North
Total
Addition in capacity over the plan period (in MW)
February 2016
11,600
End of 12th 13th plan
46,600
End of 13th
plan
54,400
Source: CEA, MOSL
28
Capital Goods | Transmission
Annexures
Exhibit 31: Inter-regional transmission links planned till FY22
Source: CEA
Exhibit 32: Inter-state transmission system current and proposed till FY17
Source: CEA, MOSL
February 2016
29
Capital Goods | Transmission
Exhibit 33: Inter-regional links at the end of 12th and 13th Plans
East – North (MW)
Dehri-Sahupuri 220 kV S/c
Sasaram HVDC back-to-back
Muzaffarpur-Gorakhpur 400 kV D/c (with Series Cap+TCSC)
Patna – Balia 400kV D/c (Quad)
Biharshariff – Balia 400kV D/c(Quad)
Barh – Balia 400kV D/c (Quad)
Gaya - Balia 765kV S/c
Sasaram bypassing(additional capacity)
Sasaram - Fatehpur 765kV2x S/c
Barh-II-Gorakhpur 400kV D/c (Quad) line
Gaya-Varanasi 765 kV S/c line
Biharsharif - Varanasi 400kV D/c line with quad conductor
Tillaiyya – Balia 765kV D/c line, one ckt via Gaya
Angul (ER- Orissa) – Badarpur (NR-Delhi) +800kV, 6000MW HVDC bipole with 3000MW
terminal Capacity
Sub-total
EAST - WEST
Budhipadar-Korba 220 kV 3 ckts.
Rourkela-Raipur 400 kV D/c with series comp.+TCSC
Ranchi –Sipat 400 kV D/c with series comp.
Rourkela-Raipur 400 kV D/c (2nd) with series comp.
Ranchi - Dharamjayagarh - WR Pooling Station 765kV S/c line
Ranchi - Dharamjaygarh 765kV 2nd S/c
Jharsuguda-Dharamjaygarh 765kV D/c line
Jharsuguda - Dharamjaygarh (to be LILOed at Raigarh Tamnar) 765kV D/c line (2nd)
Jharsuguda - Raipur Pool 765kV D/c line
Sub-total
WEST-NORTH
Auriya-Malanpur 220 KV D/c
Kota - Ujjain 220 KV D/c
Vindhyachal HVDC back-to-back
Gwalior-Agra 765 kV 2 x S/c
Zerda-Kankroli 400kV D/c
Champa Pool- Kurukshetra HVDC Bipole
Gwalior-Jaipur 765kV 2xS/c lines
RAPP-Sujalpur 400kV D/c
Adani(Mundra) - Mahendranagar HVDC bipole
Up gradation of Champa – Kurukshetra +800kV, 6000MW HVDC bipole with 3000MW
terminal Capacity
Jabalpur – Orai 765kV D/c line
Banaskanta – Chittorgarh 765kV D/c line
Dhanvahi – Fatehpur 765kV D/c line
Sub-total
EAST- SOUTH
Balimela-Upper Sileru 220kV S/c
Gazuwaka HVDC back-to-back
Talcher-Kolar HVDC bipole
Upgradation of Talcher-Kolar HVDC Bipole
Angul - Srikakulum 765kV D/c line
Angul - Srikakulum 765kV D/c line (2nd)
Sub-total
WEST- SOUTH
Chandrapur HVDC back-to-back
Kolhapur-Belgaum 220kV D/c
Ponda – Nagajhari 220kV D/c
Raichur - Sholapur 765kV S/c line (PG)
Raichur - Sholapur 765kV S/c line (Pvt. Sector)
February 2016
Balance
End of During End of
Present by 12th
12th Plan 13th plan 13th plan
Plan
(MW)
(MW)
(MW)
(MW)
(MW)
130
130
130
500
500
500
2,000
2,000
2,000
1,600
1,600
1,600
1,600
1,600
1,600
1,600
1,600
1,600
2,100
2,100
2,100
500
500
500
4,200
4,200
4,200
1,600
1,600
1,600
2,100
2,100
2,100
1,600
1,600
1,600
4,200
4,200
14,230
3,700
19,530
2,100
4,200
390
1,400
1,200
1,400
2,100
2,100
4,200
6,300
12,790
390
1,400
1,200
1,400
2,100
6,490
260
260
500
4,200
1,000
3,000
4,200
1,000
2,500
8,720
130
1,000
2,000
500
3,630
1,000
260
260
2,100
2,100
3000*
3,000
5,800
26,730
4,200
4,200
8,400
390
1,400
1,200
1,400
2,100
2,100
4,200
4,200
4,200
21,190
260
260
500
4,200
1,000
3,000
4,200
1,000
2,500
8,200
16,920
4,200
130
1,000
2,000
500
4,200
4,200
7,830
1,000
260
260
2,100
2,100
260
260
500
4,200
1,000
3,000
4,200
1,000
2,500
3,000
3,000
4,200
4,200
4,200
15,600
4,200
4,200
4,200
32,520
4,200
4,200
130
1,000
2,000
500
4,200
4,200
12,030
1,000
260
260
2,100
2,100
30
Capital Goods | Transmission
Exhibit 33: Inter-regional links at the end of 12th and 13th Plans
East – North (MW)
Balance
End of During End of
Present by 12th
12th Plan 13th plan 13th plan
Plan
(MW)
(MW)
(MW)
(MW)
(MW)
2,200
2,200
2,200
4,200
4,200
6,000
6,000
4,200
4,200
5,720
2,200
7,920
14,400 22,320
Narendra - Kolhapur 765kV D/c (ch at 400kV)
Wardha - Nizamabad 765kV D/c line
Raigarh - Pugalur +/- 800kV, 6000 Bi-pole
Warora Pool - Warangal 765kV D/c line
Sub-total
EAST- NORTH EAST
Birpara-Salakati 220kV D/c
260
Siliguri - Bongaigaon 400 kV D/c
1,000
Siliguri - Bongaigaon 400 kV D/c (Quad) line
Sub-total
1,260
NORTH EAST-NORTH
Biswanath Chariali - Agra +/- 800 kV, 3000 MW HVDC Bi-pole
LILO of Biswanath Chariali - Agra +/- 800 kV, 3000 MW HVDC Bi-pole at new pooling station
in Alipurduar and addition of second 3000 MW module
Rangia/Rowta – Gurudaspur +800kV, 6000/6500 MW HVDC bipole with 3000MW terminal
Capacity
Sub-total
Total
40,050
1,600
1,600
260
1,000
1,600
2,860
3,000
3,000
3,000
3,000
3,000
3,000
6,000
32,200
6,000
73,850
260
1,000
1,600
2,860
-
3,000
3,000
3,000
54,400
9,000
126,650
Source: CEA
Exhibit 34: Normative spending in various segments of the power sector
POWER SECTOR
Generation 40%
Transmission 20%
Distribution 40%
Trans Line 60%
Sub-station 40%
Tower pkg. 60%
Transformers 50%
Conductors 25%
Others 50%
Others 15%
Source: Company, MOSL
February 2016
31
Capital Goods | Transmission
Exhibit 35: Ownership-wise break-up of installed capacity (Jan, 15)
Central, 26
Private, 40
State, 35
Source: CEA, MOSL
Exhibit 36: 2021-22 Load generation balance report
Summer Peak
Region wise
Dispatch (% of IC)
Monsoon Peak
Demand
Sur(+) / Def(-)
Dispatch (% of IC)
Demand
Sur(+) /Def(-)
NR
66,000 (65%)
86,500
-20,500
64,500 (63%)
83,000
-18,500
WR
93,200 (63%)
81,700
11,500
79,500 (53%)
77,500
2,000
SR
65,000 (55%)
80,500
-15,500
57,500 (48%)
74,000
-16,500
ER
53,800 (69%)
36,000
17,800
56,800 (73%)
34,200
22,600
NER
8,000 (55%)
4,100
3,900
10,000 (68%)
3,900
6,100
Bhutan
4,000 (61%)
0
4,000
5,500 (83%)
0
5,500
1,000
-1,000
1,000
-1,000
200
-200
200
-200
290,000
0
273,800
0
Bangladesh
Pakistan
All India
290,000 (62%)
273,800(58%)
Winter Peak
Region wise
Dispatch (% of IC)
Winter Off-Peak
Demand
Sur(+) / Def(-)
Dispatch (% of IC)
Demand
Sur(+) /Def(-)
NR
59,800 (59%)
82,000
-22,200
40,000 (39%)
61,000
-21,000
WR
97,900 (66%)
86,000
11,900
75,900 (51%)
60,000
15,900
SR
62,900 (53%)
82,000
-19,100
45,000 (38%)
58,000
-13,000
ER
5,800 (75%)
33,300
24,700
45,000 (58%)
25,200
19,800
NER
6,700 (46%)
3,900
2,800
1,500 (10%)
2,900
-1,400
Bhutan
3,100 (47%)
0
3,100
600 (9%)
0
600
1,000
-1,000
700
-700
200
-200
200
-200
288,400
0
208,000
0
Bangladesh
Pakistan
All India
February 2016
288,400 (61%)
208,000 (44%)
32
Capital Goods | Transmission
Companies
BSE Sensex: 23,192
S&P CNX: 7,048
February 2016BSE Se
Companies
ABB
34
Alstom T&D India
39
Crompton Greaves
48
KEC International
53
Larsen & Toubro
58
February 2016
33
February 2016
Update | Sector: Capital Goods
ABB India
BSE SENSEX
S&P CNX
23,192
7,048
CMP: INR1,101
TP: INR1,380 (+25)
Neutral
Well geared for a recovery; valuations expensive
Stock Info
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
M.Cap. (INR b)
M.Cap. (USD b)
Avg Val ( INR m)
Free float (%)
ABB IN
211.9
1,525/963
14 /0 /-3
233.3
3.4
92
25.0
Financials Snapshot (INR b)
Y/E Dec
2015 2016E 2017E
Net Sales
81.4
84.8
97.6
EBITDA
7.5
9.3
10.9
Adj PAT
3.0
4.5
5.5
Adj EPS (INR)
15.8
21.1
25.8
EPS Gr (%)
22.8
34.0
22.2
146.
168.
193.
BV/Sh (INR)
RoE (%)
10.7
12.6
13.3
RoCE (%)
10.3
13.6
14.3
P/E (x)
69.9
52.2
42.7
P/BV (x)
7.5
6.6
5.7
Estimate change
TP change
Rating change
Shareholding pattern (%)
As On
Dec-15 Sep-15 Dec-14
Promoter
75.0
75.0
75.0
DII
12.4
12.5
12.2
FII
4.4
4.6
4.8
Others
8.3
7.9
8.0
FII Includes depository receipts
Stock Performance (1-year)
Reorientation toward products business
Products business revenue increased from INR42b in CY09 to INR55b in CY15. The
increase was driven by introduction of products like solar inverters, LV products,
wind generators, motors and switchgears and is commendable—given the
constrained investment climate. ABB is strongly positioned in several macro
themes like i) renewables (3GW capacity for wind generators)/solar inverters (5%
of order book), ii) railways (with converters, turbochargers, electrification, etc.; 3%
of revenue) and iii) mining (motors, electrification, automation).
Project business profitability expected to revive
Reorientation of projects strategy, with focus on orders entailing higher valueadded pull-through for products, better risk profiling (including contingencies) and
cash over revenue. Thus, power systems margins should enter a new target range
of 8%-9% (v/s ~6.5% in CY15). ABB has significant spare capacity in the business
and, thus, could be an important beneficiary—given the operating leverage.
Margin expansion led by focused effort in localization through ‘In Country, For
Country’ initiative
Gross margin at 35% expanded to near decadal-high levels CY15, led by focused
localization efforts and supported by product-mix change and favorable currency.
RM costs declined from peak levels of 75% in CY10 to 65% in CY15, supporting
margin despite muted revenue CAGR of 5% over the same period. ABB invested
INR10b over CY07-14 in greenfield capacity, leading to near trebling of gross fixed
assets. ABB has commissioned factories in LV products/discrete automation/GIS/
distribution transformers/motors, etc., which led to poor fixed cost absorption. We
believe that product margin will rebound as the operating leverage kicks in. As part
of the ‘In Country, For Country’ initiative, local product development is an
important priority.
Increased focus on exports and service portfolio: key building block for improved
profitability: Exports increased from INR5b in 2010 to ~INR10b in 2015.
Contribution of service revenue increased to 11% of sales in CY15. Margin on
exports is better than domestic and service has high double-digit margin. ABB is
exploring new markets like Africa and Myanmar.
Valuation and rating
ABB could be one of the important beneficiaries, given the increased share of
products (~65% of revenue)—which are largely beneficiaries in ‘early to mid-cycle’.
ABB is also exposed to several important trends. Current earnings are impacted by
legacy projects and negative operating leverage in products; thus, not a reflection
of long-term potential. Maintain Neutral.
February 2016
34
ABB India
Exhibit 1: Revenue growth to pick up with improvement in
execution of projects in hand
Exhibit 2: Product revenues have increased on low project
orders (INR b)
Source: MOSL, Company
Source: MOSL, Company
Exhibit 3: Dedicated export oriented factories has helped to
ramp up the exports
Exhibit 4: FG imports have declined led by focus on
indigenization
Source: MOSL, Company
Source: MOSL, Company
Exhibit 5: Order inflows to pick up led by strong T&D,
renewables and rail capex momentum
Exhibit 6: Reorientation towards products business and
introduction of new products has helped to ramp up orders
from products segment
Source: MOSL, Company
Source: MOSL, Company
February 2016
35
ABB India
Exhibit 7: Key operation metrics
Year ended
Revenues (INR m)
LV Products
Discrete Automation & Motion
Process automation
Power products
Power systems
Gross Segmental Sales
2010
2011
2012
2013
2014
2015E
2016E
2017E
4,486
15,929
11,886
18,155
18,267
68,722
5,399
17,993
13,219
20,008
23,624
80,243
6,174
17,753
13,566
20,853
22,422
80,767
6,769
18,237
12,480
21,304
23,851
82,640
7,373
18,986
12,450
23,255
21,554
83,617
8,006
20,624
12,503
25,992
18,707
85,832
8,068
24,796
12,503
26,125
17,979
89,472
9,279
30,994
12,702
30,931
19,110
103,016
Revenue Growth (% YoY)
LV Products
Discrete Automation & Motion
Process automation
Power products
Power systems
Revenue Growth
17.3%
13.2%
-1.8%
-8.9%
6.3%
1.3%
20.4%
13.0%
11.2%
10.2%
29.3%
16.8%
14.4%
-1.3%
2.6%
4.2%
-5.1%
0.7%
9.6%
2.7%
-8.0%
2.2%
6.4%
2.3%
8.9%
4.1%
-0.2%
9.2%
-9.6%
1.2%
8.6%
8.6%
0.4%
11.8%
-13.2%
2.6%
0.8%
20.2%
0.0%
0.5%
-3.9%
4.2%
15.0%
25.0%
1.6%
18.4%
6.3%
15.1%
EBIT Margins (%)
LV Products
Discrete Automation & Motion
Process automation
Power products
Power systems
0.4%
8.3%
6.9%
4.5%
-0.6%
6.3%
11.5%
2.9%
5.0%
0.0%
6.4%
11.0%
-1.1%
6.6%
2.9%
3.7%
6.9%
5.7%
8.0%
3.9%
5.4%
6.8%
8.0%
7.9%
5.3%
9.1%
8.2%
10.1%
9.1%
6.5%
10.1%
9.2%
10.1%
10.6%
8.0%
10.1%
9.2%
10.1%
11.0%
8.0%
Costs, % of Revenues
Material Costs
Contribution Margins, %
Staff Costs
Other Expenses
EBIDTA %
Products (% of Revenues)
75.5%
24.5%
7.7%
12.6%
4.2%
54.1%
72.4%
27.6%
7.9%
13.4%
6.3%
55.4%
71.7%
28.3%
8.2%
13.7%
6.4%
56.0%
69.9%
30.1%
8.8%
13.6%
7.7%
59.3%
67.8%
32.2%
9.1%
13.8%
9.3%
63.6%
65.1%
34.9%
9.2%
14.6%
11.1%
65.9%
64.5%
35.5%
8.7%
15.5%
11.3%
69.1%
65.2%
34.8%
8.8%
14.7%
11.3%
68.1%
6.3
46.8
6.3
71.2
5.5
71.8
5.5
71.7
5.5
74.1
5.6
75.2
6.5
78.5
7.4
78.5
12.2
-38.2%
152.8
7.5
65.6%
92.3
12.4
-23.6%
120.7
9.5
35.0%
89.5
12.8
22.8%
72.9
15.8
34.0%
54.4
21.1
22.2%
44.5
25.8
14.3%
38.9
Fixed Assets Turn (x)
NWC (Days)
EPS (INR/sh)
% YoY
PER (x)
February 2016
36
ABB India
Financials and valuations
Income Statement
Y/E December
Net Sales
Change (%)
Raw Materials
Staff Cost
Other Mfg. Expenses
Selling Expenses
Admin. & Other Exp.
EBITDA
% of Net Sales
Depreciation
Interest
Other Income
Extra-ordinary Items (net)
PBT
Tax
Rate (%)
PAT
Adjusted PAT
Change (%)
(INR Million)
2011
73,703
15.9
53,954
5,868
3,703
1,099
6,753
2,325
3.2
796
307
415
253
1,890
832
44.0
1,058
1,593
151.9
2012
75,650
2.6
54,278
6,196
4,181
1,086
5,191
4,718
6.2
941
432
-20
-1,263
2,062
688
33.4
1,374
2,637
65.6
2013
77,218
2.1
53,985
6,771
4,363
1,044
6,110
4,945
6.4
1,033
1,011
70
-223
3,194
956
29.9
2,238
2,015
-23.6
2014
77,333
0.1
52,429
7,052
4,489
1,133
6,239
5,991
7.7
1,128
1,050
173
-435
3,552
1,267
35.7
2,285
2,719
35.0
2015
81,403
5.3
53,000
7,499
4,904
1,174
7,361
7,465
9.2
1,598
912
130
-340
4,746
1,747
36.8
2,999
3,339
22.8
2016E
84,834
4.2
54,713
7,385
5,128
1,226
7,068
9,313
11.0
1,642
1,379
99
0
6,390
1,917
30.0
4,473
4,473
34.0
Balance Sheet
2017E
97,604
15.1
63,646
8,552
5,811
1,413
7,287
10,894
11.2
1,784
1,399
99
0
7,810
2,343
30.0
5,467
5,467
22.2
(INR Million)
Y/E December
Share Capital
Reserves
Net Worth
Loans
Net Deffered Tax Liability
Capital Employed
2011
424
24,921
25,345
0
-224
25,121
2012
424
25,557
25,981
3,277
-148
29,109
2013
424
26,352
26,776
6,243
-272
32,746
2014
424
27,696
28,120
3,756
-152
31,723
2015
424
30,695
31,119
6,758
-490
37,387
2016E
424
35,168
35,592
6,758
-490
41,860
2017E
424
40,635
41,059
6,758
-490
47,327
Gross Fixed Assets
Less: Depreciation
Net Fixed Assets
Capital WIP
Investments
Curr. Assets
Inventory
Debtors
Cash & Bank Balance
Loans & Advances
Other current Assets
Current Liab. & Prov.
Creditors
Other Liabilities
Provisions
Net Current Assets
Application of Funds
E: MOSL Estimates
14,619
2,935
11,684
839
507
49,600
9,255
30,825
2,644
3,667
3,210
37,509
18,649
16,530
2,331
12,091
25,121
15,856
3,783
12,073
1,170
525
50,784
9,204
32,644
767
4,585
3,585
35,443
19,033
13,946
2,465
15,341
29,109
18,627
4,712
13,915
475
173
55,661
9,889
32,357
3,166
6,077
4,172
37,477
20,826
13,960
2,692
18,184
32,747
19,718
5,723
13,995
319
165
53,585
8,938
31,575
2,260
6,790
4,022
36,341
19,840
12,977
3,524
17,244
31,723
22,220
7,321
14,899
319
164
60,008
9,396
33,909
5,736
3,964
7,003
38,003
21,020
12,720
4,263
22,005
37,387
24,134
8,963
15,171
319
163
65,440
9,816
35,425
8,959
6,882
4,359
39,233
20,647
14,457
4,129
26,207
41,860
25,857
10,747
15,110
319
180
76,043
11,308
40,810
10,976
7,928
5,021
44,325
23,785
15,782
4,757
31,719
47,327
February 2016
37
ABB India
Financials and valuations
Ratios
Y/E December
Basic (INR)
EPS
Growth
Cash EPS
Book Value
DPS
Payout (incl. Div.Tax)
Valuation (x)
P/E
Cash P/E
EV/EBITDA
EV/Sales
Price/Book Value
Dividend Yield (%)
Profitability Ratios (%)
RoE
RoCE
Turnover Ratios
Debtors (Days)
Inventory (Days)
Creditors. (Days)
Asset Turnover (x)
Leverage Ratio
Debt/Equity (x)
2011
2012
2013E
2014
2015
2016E
2017E
7.5
-38.2
11.3
119.6
3.0
39.9
12.4
65.6
16.9
122.6
3.0
24.1
9.5
-23.6
14.4
126.4
3.0
31.8
12.8
35.0
18.2
132.7
3.7
28.8
15.8
22.8
23.3
146.8
3.7
23.5
21.1
34.0
28.9
168.0
7.2
34.3
25.8
22.2
34.2
193.8
8.9
34.3
85.8
60.6
36.6
3.0
8.3
0.3
69.9
47.3
31.7
2.9
7.5
0.3
52.2
38.1
24.4
2.7
6.6
0.7
42.7
32.2
18.7
2.3
5.7
0.8
6.4
8.3
10.1
6.3
7.5
8.0
9.7
9.2
10.7
10.3
12.6
13.6
13.3
14.3
153
46
92
2.9
158
44
92
2.6
153
47
98
2.4
149
42
94
2.4
152
42
94
2.2
152
42
89
2.0
153
42
89
2.1
0.0
0.1
0.2
0.1
0.2
0.2
0.2
2011
2,425
795
307
832
467
2,855
2012
3,325
941
432
688
-5,127
-1,549
2013
2,971
1,033
1,011
956
-444
2,604
2014
3,986
1,128
1,050
1,267
34
3,881
2015
5,086
1,353
900
1,747
-1,285
3,652
2016E
6,390
1,712
200
1,917
-979
5,136
-5,081
(2,226)
-339
-5,345
-1,661
(3,210)
-18
-1,774
-2,180
425
352
-1,815
-1,053
2,828
8
-1,134
-2,502
1,150
1
-2,039
-1,914
3,222
1
-1,989
-1,722
2,034
-17
-1,939
(Inc)/Dec in Net Worth
(Inc)/Dec in Debt
Less : Interest Paid
Dividend Paid
CF from Fin. Activity
2
0
307
739
-737
0
3,277
432
739
2,182
-253
2,924
1,011
744
789
-30
-2,490
1,050
911
-4,157
911
-1,855
900
911
-4,537
1,784
-371
200
1,784
-2,929
2,180
-297
100
2,180
-3,714
Inc/Dec of Cash
Add: Beginning Balance
Closing Balance
E: MOSL Estimates
-3,228
5,871
2,644
-1,877
2,644
767
2,399
767
3,165
-906
3,165
2,260
3,476
2,260
5,736
3,223
5,736
8,959
2,017
8,959
10,976
Cash Flow Statement
Y/E December
PBT before EO Items
Add : Depreciation
Interest
Less : Direct taxes paid
(Inc)/Dec in WC
CF from operations
(Inc)/Dec in FA
Free Cah Flow
(Pur)/Sale of Investments
CF from investments
February 2016
(INR Million)
2017E
7,810
1,859
100
2,343
-3,495
3,756
38
February 2016
Update | Sector: Capital Goods
Alstom T&D India
BSE SENSEX
S&P CNX
23,192
7,048
CMP: INR402
TP: INR470 (+17%)
Buy
Investing ahead of time
Highest localization amongst MNC T&D players
Stock Info
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
M.Cap. (INR b)
M.Cap. (USD b)
Avg Val ( INR m)
Free float (%)
ATD IN
256.1
656 /380
1/-6/-5
103
1.5
70
25.0
Financials Snapshot (INR b)
Y/E March
2015 2016E 2017E
Net Sales
37.0 38.4 44.4
EBITDA
3.1
2.9
4.7
Adj PAT
1.2
1.4
2.6
EPS (INR)
4.7
5.3 10.0
EPS Gr. (%)
5.6 12.4 88.9
BV/Sh. (INR)
51.2 54.1 59.4
RoE (%)
9.4 10.0 17.6
RoCE (%)
10.8 10.8 16.6
P/E (x)
85.4 76.0 40.2
P/BV (x)
7.8
7.4
6.8
Estimate change
TP change
Rating change
Well positioned to benefit from upcoming opportunities in high-tech
products
The Indian transmission network has been moving toward higher voltage levels
and newer technologies. The shift is beneficial for MNC T&D players like Alstom
T&D who have access to the parent’s product, which can be introduced in the
country. The Indian grid has already moved to 765kv voltage and HVDC links are
increasingly being deployed to transmit large amounts of power across the
country. Post the northern grid blackout, high-technology products such as Static
Variable compensators and Phase Measuring Units (PMUs) etc. are also being
deployed to improve grid stability where Alstom T&D is well placed to bag orders.
GE coming on board a medium-term trigger for the stock
Shareholding pattern (%)
As On
Alstom T&D India was amongst the first MNC T&D companies to identify India as a
key market for growth. Even before PGCIL mandated a domestic manufacturing
clause for 765kv transformers, Alstom T&D had set up a plant in Baroda to
address the Indian 765kv transformer demand. It was also the first to introduce
400/765kv GIS in India from its factory in Tamil Nadu and recently dispatched the
800kv HVDC transformer from its Baroda factory. Imported raw material content
(% of total consumed) stands at 21% for Alstom T&D v/s 40% for Siemens India
and 39% for ABB India. The government’s recent initiatives to promote “Make In
India” would benefit Alstom T&D the most as its products are amongst the most
localized in the country.
Sep-15
Jun-15
Sep-14
Promoter
75.0
75.0
75.0
DII
14.1
14.6
15.2
FII
2.1
2.0
1.5
Others
8.8
8.4
8.4
FII Includes depository receipts
Stock Performance (1-year)
Post the recent approval from regulators, GE w a 50% stake in Alstom SA’s Grid
JV—through the transaction, GE will also acquire a 37.5% stake in Alstom T&D
India where Alstom SA was earlier holding a 75% stake. In our view, it is too early
to guess as to the operational synergies that would accrue as a result of GE
coming on board; however, we do note that GE has highlighted in recent analyst
interactions that it would like to a) increase its market share in the transmission
segment in both India and China and is targeting higher volumes as it starts to
offer a combined GE-Alstom product offering to its customers, b) focus on
profitability over volumes, and c) focus on exports for growth.
Valuation and key triggers
We forecast earnings to see a 41% CAGR over FY15-18e, driven by execution of
the Champa-Kurukshetra Phase 1 and Phase 2 HVDC orders. Alstom T&D is
currently trading at 41x/31x FY17E/FY18E EPS. We initiate coverage on the stock
with a Buy rating and a target price of INR470 (35x FY18e EPS). Key triggers for the
stock are the favorable outcome of the company’s bid for the 6000MW RaigarhPugular HDVC line (~INR70b with Alstom T&D’s share at ~INR40b) and
improvement in margins with the commencement of Champa-Kurukshetra Phase
II order execution in 2H16.
February 2016
39
Alstom T&D India
Exhibit 7: Revenue growth to pick up as execution of
Champa-Kurukshetra Phase 2 starts from Q416-Q117
25
32
35
Net Sales
12
Switchgear
YoY growth
16
13
5
3
Exhibit 8: Segment wise revenue bifurcation for FY15
4
14
7 0
Control
Panels
Transformers
18
7
4
3
Project Items
50,680
Others
17
Services
44
FY18E
44,355
FY17E
38,353
FY16E
37,030
FY15
35,171
FY14
31,519
FY13
41,391
FY12
40,200
CY10
35,659
CY09
26,412
CY08
CY07
20,063
-24
HVDC
Source: MOSL, Company
Source: MOSL, Company
Exhibit 9: EBIDTA margins to improve led by better
operating leverage
Exhibit 10: Exports to contribute15% to sales led by focus on
SAARC grid development orders
4,885
5,280
FY14
FY15
7,733
3,952
FY13
FY18E
3,754
FY12
6,768
7,236
CY10
15.3
FY17E
10,829
CY09
5,852
6,008
FY18E
3,102
FY14
15.3 15.3
14.3
13.9
4,688
2,975
FY13
8.5
12.5
FY17E
4,182
FY12
18.0
7.7
2,948
4,238
CY10
11.9
NPM
FY16E
4,015
CY09
10.6
Exports
30.4
3,063
4,251
CY08
8.8 8.3
3,579
9.4
CY07
11.3 10.5
10.1
EBITDA Margin
FY16E
EBITDA
16.1
FY15
17.8
Source: MOSL, Company
Source: MOSL, Company
Exhibit 11: Net working capital cycle normalized post
recovery of retention money in FY15
Exhibit 12: Order book can see significant ramp up if Alstom
bags Raigarh-Pugular (6GW)project (~INR40b share)
Net working Capital days
81
67
64
62
69
92
68
67
77
87
87
Orderbook
46.3 49.1
YoY growth
33.0
25.8
Source: MOSL, Company
February 2016
72369
69986
FY18E
64600
FY14
(5.4) (3.3)
FY17E
62257
FY13
76475
46818
FY12
FY16E
48765
CY10
81288
47717
CY09
(5.9)
FY15
40948
CY08
3.8
27465
2.2 (4.0)
CY07
FY18E
FY17E
FY16E
FY15
FY14
FY13
FY12
CY10
CY09
CY08
CY07
16.5
Source: MOSL, Company
40
Alstom T&D India
Exhibit 13: Alstom T&D factories across India
Source: Alstom, MOSL, ** HVDC transformer factory is also at Vadodara
Industry positioning for Alstom T&D remains strong versus peers
Industry positioning for Alstom T&D remains the best amongst its peers as per our
proprietary ranking methodology. We have used five key parameters to compare
the three MNC T&D companies and rank them based on a score of 1 to 3, with 3
being the highest. We discuss each of these pointers in detail below:
Exhibit 14: Ranking on Industry positioning for the MNC T&D players
Alstom T&D
ABB
Siemens
India
India
India
Access to Technology
3
3
3
Localization
3
2
2
Export contribution
3
2
3
Management focus on India
3
3
3
Focus on transmission
3
2
1
3.0
2.4
2.4
Name of company
Average ranking
Comments
All 3 MNC's have access to the latest technology and products from their
parent
Alstom T&D has been the leader in terms of product localization
Exports for Alstom T&D and Siemens at ~14-16% of sales vs. ABB India at
12%
All three MNC's have highlighted their increased focus on India and see
India as a key growth market
Alstom T&D has the widest product portfolio on offer in the country and
also is the first to market
Source: Company, MOSL, Score of 3 is the highest

February 2016
Access to technology: As we had highlighted earlier in our sector note, the
Indian grid is moving towards higher voltage levels and technologies. PGCIL has
been adopting newer technologies such as HVDC lines, GIS substations, Phase
shifting transformers and Static compensators. All the three Indian MNC T&D
41
Alstom T&D India




February 2016
companies have access to their parent’s technology and can offer such
equipment and technologies to Power Grid.
Localization. Alstom T&D (erstwhile Areva T&D) was amongst the first
companies to realize the potential of the Indian transmission market. This is
evident in the fact that it has been at the forefront in indigenizing
manufacturing in the country; Alstom T&D India was the first to start 765kv
transformer manufacturing, first to localize 400/765kv GIS and now amongst the
few companies to have a 800kv HVDC transformer manufacturing facility in
India. Imported raw material cost (as % of total) is 21% for Alstom T&D vs. 39%
for ABB India and 40% for Siemens India
Exports. Exports for Alstom T&D and Siemens at ~14-16% of sales vs. ABB India
at 12%. We note that with the slowdown in the domestic markets and increases
in competition, an increasing no. of T&D players are eyeing the markets in SE
Asia, Africa and M. East for exports using India as a low cost base.
Management focus on India. All the three MNC’s have been very outspoken of
their continued focus on the Indian market and the importance of India in the
global scheme of things. With GE acquiring a stake in the Alstom T&D India
business, we expect the focus to improve even further as GE targets to increase
its market share.
Focus on transmission. Alstom T&D had identified India as a key focus market
for transmission in 2007 and has been using the Indian factories as a source for
global markets as well. Since CY07, it has invested ~INR15b on setting up new
capacities in transformers, switchgear in Vadodaram, Hosur and Padappai. This
has led to Alstom T&D being the market leader in 765kv transformers and it also
has the highest installed base of 765kv substations. It has also won the last two
HVDC orders placed by PGCIL for Champa-Kurukshetra Phase 1 and Phase 2.
However, its peers ABB India and Siemens India due to their diversified presence
and industrial capex exposure have not had similar success in transmission.
Alstom T&D derives 100% of its sales from the transmission segment, ABB India
has 55% from transmission while Siemens India has ~25% of its overall sales
exposed to the transmission sector.
42
Alstom T&D India
Reflected in strong operational performance for Alstom T&D India vs. peers
Alstom T&D India’s operational performance is better than ABB India and second to
Siemens India which is ranked one. We discuss each of these parameters in more
detail below:
Exhibit 15: Ranking on Operational performance – Alstom T&D vs. peer MNC T&D companies
Name of company
Alstom T&D India
ABB India
Siemens India
Fixed Asset turnover (5 year average)
3
2
3
EBITDA growth (3 year average)
1
3
2
ROE’s
3
1
2
Royalty Payment
3
1
2
NWC days
1
2
3
1.8
2.2
Average ranking
2.2
Source: Company, MOSL , Score of 3 is the highest





Fixed Asset Turnover. Alstom T&D’s average asset turnover over the last five
years is at 5.4x and ahead of Siemens 5x and ABB at 3x. This implies higher
utilization of its factories vs. peers.
EBITDA growth. ABB India has seen the highest EBITDA growth of 17% CGAR
over the last three years(coming off a weak base) followed by Siemens India(6%
CAGR over FY13-15) and Alstom T&D India.
ROE. FY17 ROE is seen at 18% for Alstom T&D India vs. 12% for ABB India and
14% for Siemens India. Part of the reason for higher ROE’s for Alstom T&D is
higher utilization/asset turnover as it has limited exposure to industrial capex
relative to its peers.
Royalty payments – Alstom T&D India has the lowest royalty payments (1.2% of
sales) within the three MNC‘s while ABB India(4.3% of sales,5 year average) has
the highest. Lower royalty payment is also because of the fact that Alstom T&D
has been able to indigenize a larger part of its product portfolio vis. a vis. its
peers which is reflected in lower imported raw material as % of total
Net working Capital days. Alstom T&D has a higher NWC day since it has a
higher proportion of projects business (51%) compared to ABB (40%) and
Siemens India (35%). This leads to a longer receivable cycle and therefore
higher NWC days.
“Investing ahead of time” – key strategy adopted by Alstom T&D in India




February 2016
Post 2007, the Indian grid moved to 765kv voltage levels – Alstom T&D was the
first Indian company to start off its manufacturing facility for 765kv transformer
in Baroda with its first transformer being flagged off by Mr. Narendra Modi in
2010.
In 2008, the National Load Dispatch Centre was set up where too Alstom T&D
participated by providing the energy management system
In 2009, it was the first MNC T&D players to indigenize the 400kv GIS in India
with its factory at Padappai, Tamil Nadu.
In FY14, Alstom T&D also localized manufacturing of the 765kv GIS much before
PGCIL bough in the domestic manufacturing clause for the same.
43
Alstom T&D India
Earnings growth at 41% CAGR over FY15-18E; ROE’s expand to 22% in FY18E
We build in a 41% CAGR in earnings from FY15-FY18E as delivery of the Champa –
Kurukshetra Phase 2 HVDC order picks up. We build in sales to grow 11% CGAR over
FY15-18E to INR51b. Alstom T&D has a strong order book of INR80b primarily
composed of orders from PGCIL and SEB’s (80% of order book as per our estimate).
We have not built in the Raigarh – Pugular HVDC order (6000MW, +/-800kv HVDC
order) in our order estimates for FY17. If Alstom T&D is able to win this order, our
FY18 earnings would increase by ~60% to INR23.
YoY growth
8.1
5.6
50,680
1,299
2,163
2,544
1,988
1,867
1,479
1,171
FY18E
CY06
CY07
CY08
CY09
CY10
FY12
FY13
35,171
FY14
44,355
31,519
FY13
FY17E
41,391
FY12
38,353
40,200
CY10
3.7 3.2
FY16E
35,659
CY09
3.6
37,030
26,412
CY08
5.8
FY15
20,063
CY07
-24
4.6
3.3
3.5
2,559
4
Source: Company, MOSL
NPM
FY17E
5
3
14
Recurring PAT
9.6
1,355
16
13
10.8
FY16E
12
1,205
Net Sales
FY15
35
1,142
25
32
Exhibit 17: Recurring PAT and margin %
FY14
Exhibit 16: Sales and YoY growth (%)
Source: Company, MOSL
EBITDA margins are seen expanding 360bps over FY15-18e to 12%. The expansion in
margins is being driven by a mix of operating leverage and better margins products
contributing to sales. Margins are expected to be better in Phase 2 of Champ
Kurukshetra – Phase 1 of Champa Kurukshetra was won by Alstom SA at INR25b of
which Alstom T&D’s share was at INR11b. Phase 2 of Champa Kurukshetra was won
for INR33b (35% higher) and there were only 2 bidders for this project – Alstom T&D
India’s share in this is at INR15b. The reason we believe that margins should be
higher are:



February 2016
Since Phase 2 is a parallel line to Phase 1, we expect design, engineering costs to
be much lower since Alstom has already done this while executing Phase 1 of
this line
The price at which Phase 2 has been won is 35% higher than of Phase 1. We
understand that this could have been a strategy to pick up Phase 1 at an
aggressive price and make up for this by building in higher margins in Phase 2 of
the projects
Competitive intensity was lower in Phase 2 than Phase 1. Phase 1 saw
participation from all the 3 MNC T&D companies, namely ABB India, Siemens
India and Alstom T&D India. For Phase 2, competition was limited to ABB India
and Alstom T&D India as Siemens did not participate in the financial bids
44
Alstom T&D India
Exhibit 18: Key assumptions
INR M
Order Intake
Closing Order-book
Book-to-Bill (TTM)
Revenues (INR m)
Switchgears
Control Panels
Line Taps
Current Transformers
Bushings
Transformers
Project Items
Others
Growth % YoY
Switchgears
Control Panels
Line Taps
Current Transformers
Bushings
Transformers
Project Items
Others
Revenue Composition (INR M)
- Domestic
- Overseas
Total Revenues
Margins
Contribution Margins, %
Staff Cost, %
Other Expenses, %
EBIDTA, %
Working Capital, Days
Inventories
Sundry Debtors
Other Current Assets
Loans and advances
Total Current assets
Sundry Creditors
Other Current liabilities
Provisions
Total Current Liabilities
Net Working Capital
CY10
FY12
FY13
FY14
FY15
FY16E
FY17E
FY18E
41,848
48,765
1
37,852
46,818
1
46,902
62,257
2
37,831
64,600
2
51,600
81,288
2
33,540
76,475
2
40,248
72,369
2
48,298
69,986
1
9,332
501
214
620
245
12,619
18,287
1,237
7,237
849
506
950
308
9,754
19,163
5,430
6,914
1,254
7,229
1,490
6,752
1,115
6,875
15,119
3,157
7,485
15,260
4,246
6,207
18,769
1,596
19
-24
-9
13
-2
57
-2
35
-22
69
137
53
26
-23
5
339
-4
48
-30
-21
-42
5
19
9
1
34
-7
-25
-17
23
-62
35,435
7,236
42,671
40,543
3,754
44,297
27,567
3,952
31,519
30,286
4,885
35,171
31,750
5,280
37,030
32,500
5,852
38,353
37,587
6,768
44,355
42,947
7,733
50,680
31.5%
8.6%
12.4%
10.5%
28.3%
8.8%
9.4%
10.1%
33.5%
10.3%
13.8%
9.4%
31.9%
9.8%
13.4%
8.8%
31.4%
9.3%
13.8%
8.3%
31.4%
9.9%
13.9%
7.7%
31.9%
8.9%
12.5%
10.6%
32.4%
8.1%
12.5%
11.9%
44
194
47
29
314
166
58
9
233
81
49
159
34
27
269
137
52
10
199
69
80
199
70
44
393
210
95
19
325
68
71
238
59
38
406
205
88
21
315
92
68
212
44
36
359
179
90
22
292
67
68
212
44
36
359
169
90
22
282
77
68
212
44
36
359
159
90
22
272
87
68
212
44
36
359
159
90
22
272
87
Source: Company, MOSL
February 2016
45
Alstom T&D India
Financials and valuations
Income Statement
Y/E March
Total Revenues
Change (%)
Raw Materials
Staff Cost
Other Expenses
EBITDA
% of Total Revenues
Other Income
Depreciation
Interest
PBT
Tax
Rate (%)
Adjusted PAT
Change (%)
Exceptional Items
Reported PAT
Change (%)
FY12
41,391
3.0
29,672
3,636
3,900
4,182
10.1
153
1,014
1,090
2,231
752
33.7
1,479
-20.8
145
1,624
-13.0
FY13
31,519
-23.9
20,953
3,246
4,345
2,975
9.4
169
813
775
1,556
385
24.7
1,171
-20.8
-330
841
-48.2
FY14
35,171
11.6
23,936
3,434
4,699
3,102
8.8
302
870
788
1,746
604
34.6
1,142
-2.5
29
1,170
39.1
FY15
37,030
5.3
25,388
3,457
5,122
3,063
8.3
190
819
734
1,701
496
29.2
1,205
5.6
0
1,205
3.0
FY16E
38,353
3.6
26,294
3,789
5,321
2,948
7.7
427
873
589
1,913
558
29.2
1,355
12.4
0
1,355
12.4
FY17E
44,355
15.7
30,188
3,954
5,525
4,688
10.6
542
902
716
3,613
1,054
29.2
2,559
88.9
0
2,559
88.9
(INR Million)
FY18E
50,680
14.3
34,239
4,120
6,313
6,008
11.9
538
930
801
4,815
1,404
29.2
3,411
33.3
0
3,411
33.3
Balance Sheet
Y/E March
Share Capital
Reserves
Net Worth
Minority Intetest
Loans
Deferred Tax Liability
Capital Employed
FY12
478
8,286
8,764
0
5,935
150
14,849
FY13
478
8,624
9,102
0
4,177
124
13,402
FY14
512
11,976
12,488
0
4,152
40
16,680
FY15
512
12,605
13,117
0
2,166
-86
15,197
FY16E
512
13,332
13,844
0
3,666
-86
17,424
FY17E
512
14,705
15,218
0
4,166
-86
19,297
(INR Million)
FY18E
512
16,536
17,048
0
4,666
-86
21,628
9,640
3,153
6,487
182
0
30,794
5,554
18,023
331
3,012
3,875
22,615
15,576
7,038
8,180
14,849
10,033
3,835
6,198
535
0
34,692
6,942
17,146
781
3,766
6,057
28,024
18,128
9,896
6,669
13,402
10,982
4,588
6,394
1,101
0
39,502
6,830
22,961
364
3,628
5,719
30,317
19,773
10,544
9,185
16,680
12,126
5,259
6,867
702
0
37,268
6,932
21,478
815
3,624
4,419
29,640
18,202
11,438
7,628
15,197
12,526
6,132
6,394
702
0
39,976
7,180
22,245
2,221
3,754
4,576
29,648
17,801
11,847
10,328
17,424
12,926
7,034
5,892
702
0
45,776
8,303
25,727
2,112
4,341
5,293
33,073
19,372
13,701
12,703
19,298
Gross Fixed Assets
Less: Depreciation
Net Fixed Assets
Capital WIP
Investments
Curr. Assets
Inventory
Debtors
Cash & Bank Balance
Loans & Advances
Other Current Assets
Current Liab. & Prov.
Creditors
Other Liabilities
Net Current Assets
Application of Funds
E: MOSL Estimates
February 2016
13,326
7,964
5,362
702
0
53,352
9,487
29,395
3,462
4,960
6,047
37,789
22,134
15,655
15,564
21,628
46
Alstom T&D India
Financials and valuations
Ratios
Y/E March
Basic (INR)
Adj EPS
Cash EPS
Book Value
DPS
Payout (incl. Div. Tax.)
Valuation (x)
P/E
EV/EBITDA
EV/Sales
Price/Book Value
Dividend Yield (%)
Profitability Ratios (%)
RoE
RoCE
Turnover Ratios
Debtors (Days)
Inventory (Days)
Creditors. (Days)
Asset Turnover (x)
Leverage Ratio
Debt/Equity (x)
FY12
FY13
FY14
FY15
FY16E
FY17E
FY18E
6.2
10.4
36.7
1.7
25.0
4.9
8.3
38.1
1.8
51.2
4.5
7.9
48.8
1.8
39.4
4.7
7.9
51.2
1.8
38.5
5.3
8.7
54.1
2.0
38.5
10.0
13.5
59.4
3.8
38.5
13.3
17.0
66.6
5.1
38.5
90.2
34.4
3.0
8.2
0.4
85.4
34.0
2.8
7.8
0.4
76.0
35.4
2.7
7.4
0.5
40.2
22.4
2.4
6.8
1.0
30.2
17.3
2.1
6.0
1.3
17.3
13.9
9.4
10.2
10.8
11.3
9.4
10.8
10.0
10.8
17.6
16.6
21.1
19.4
159
49
137
2.8
199
80
210
2.4
238
71
205
2.1
212
68
179
2.4
212
68
169
2.2
212
68
159
2.3
212
68
159
2.3
0.7
0.5
0.3
0.2
0.3
0.3
0.3
Cash Flow Statement
Y/E March
PBT before EO Items
Depreciation
Interest
Direct Taxes Paid
(Inc)/Dec in WC
CF from Operations
Others
CF from Oper. Incl. Others
FY12
2,231
1,014
492
-643
-1,104
1,990
531
2,521
FY13
1,556
813
537
-82
1,047
3,871
657
4,528
FY14
1,774
870
685
-543
-4,090
-1,303
-108
-1,412
FY15
1,702
819
639
-676
2,548
5,031
-10
5,021
FY16E
1,913
873
589
-558
-1,294
1,523
0
1,523
FY17E
3,613
902
716
-1,054
-2,484
1,693
0
1,693
(Inc)/Dec in FA
Free Cash Flow
Investment in liquid assets & Others
CF from Investments
-1,078
1,443
221
-857
-890
3,638
272
-617
-1,779
-3,191
585
-1,194
-787
4,234
-582
-1,369
-400
1,123
0
-400
-400
1,293
0
-400
-400
3,231
0
-400
(Inc)/Dec in Shares
(Inc)/Dec in Debt
Interest Paid
Dividend Paid
CF from Fin. Activity
-863
0
-656
-499
-2,018
-1,801
0
-662
-497
-2,960
2,752
636
-700
-498
2,189
0
-1,986
-678
-538
-3,202
0
1,500
-589
-628
283
0
500
-716
-1,186
-1,402
0
500
-801
-1,580
-1,881
-353
684
331
950
-169
781
-417
781
364
450
364
814
1,406
815
2,221
-109
2,221
2,112
1,350
2,112
3,462
Inc/Dec of Cash
Add: Beginning Balance
Closing Balance
E: MOSL Estimates
February 2016
(INR Million)
FY18E
4,815
930
801
-1,404
-1,510
3,631
0
3,631
47
February 2016
Update | Sector: Capital Goods
Crompton Greaves
BSE SENSEX
S&P CNX
23,192
7,048
CMP: INR124
TP: INR165 (+33%)
Neutral
Overseas power sale and consumer listing key triggers

Stock Info
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
M.Cap. (INR b)
M.Cap. (USD b)
Avg Val ( INR m)
Free float (%)
CRG IN
626.8
204 /114
-25 /-17/-8
77.7
1.1
500
65.6
Financials Snapshot (INR b)
Y/E March
2015 2016E 2017E
105.
Net Sales
88.6
99.8
EBITDA
1.0
3.4
4.5
Adj PAT
-2.1
1.1
1.7
EPS(INR)
-3.3
1.7
2.7
EPS Gr. (%)
55.6
BV/Sh. (INR)
60.3
61.6
63.5
RoE (%)
-5.2
2.9
4.4
RoCE (%)
0.0
3.0
4.1
P/E (x)
-37.8
70.9
45.6
P/BV (x)
2.1
2.0
2.0


Estimate change
TP change
Rating change
Shareholding pattern (%)
As On
Dec-15 Sep-15 Dec-14
Promoter
34.4
34.4
34.4
DII
31.0
31.6
30.9
FII
18.3
16.9
15.0
Others
16.4
17.2
19.7

FII Includes depository receipts
Stock Performance (1-year)

February 2016
Near term set back to hive-off of overseas power division: Crompton had
planned to hive off its European, North American and Indonesian activities of
the power division and the deal was expected to be completed by endCY15/early16. However post receiving the offer CG board rejected the
proposal. CG is currently renegotiating the proposal and if deal does not go
through, focus would be to reduce losses by severing the power systems
business ($20-25m of the total $60m loss). CG has already closed down the
Brazil power systems business and decision with the US/UK business would be
taken over the next one year. CG will also restructure the Hungry business as it
remains loss making entity ($15m loss).
Demerger of consumer business to unlock value: CRG has announced a
demerger of the consumer business with effect from October 1, 2015. As part
of the demerger, Avantha Holdings (the promoter group) divested its entire
34.4% stake in Crompton Greaves Consumer Electricals Limited (CGCEL) to
Advent and Temasek. We expect consumer business listing by April, 2016 post
the requisite approvals from the stock exchanges.
Increased focused on India and global automation: CRG intends to focus on
the India business and the global automation business (with revenue of INR58b
for the retained business). The revised strategy will entail bridging technology
gaps in India in key segments (power and industrial), capitalizing on the earlymover advantage in smart grids and capacity augmentation. CRG will attempt
to strengthen its positioning—particularly in the UHV segment: i) Power
transformers, including setting up manufacturing facilities for 1200kva as the
market expands; ii) AIS breakers (as most 765kv products have been certified
and expect intake to pick up going forward); iii) GIS (will need to enter into
partnerships for expanding portfolio to 400/765kva); iv) industrial (new
products for railways, including electrics for diesel locos; need to enter into
technology partnerships for strengthening the drives portfolio, etc.).
Correcting balance sheet and cost rationalization priorities for FY16:
Consolidated net debt stands at INR9b as against INR22b (Mar’15). The
company intends to sell another INR4-5b of assets and bring down net debt
further. Planned sale of CG House (say ~INR2b) by March 2016 and hive off of
the overseas business will possibly lead to a debt-free status. The company is
also targeting cost reduction of INR1b over the next few years owing to the
need for streamlining several functions due to the shift from B2C to complete
B2B operations.
Maintain Neutral; price target INR165: Our SOTP values the Consumer
business at INR140 (25x FY18E EPS), Power/industrial business at INR25 (10x
FY18E EPS) . The Street will focus on the sale of overseas subsidiaries and this
will be the key trigger for rerating the stock along with the listing of the
consumer business by April, 2016.
48
Crompton Greaves
Exhibit 19: Constrained revenue growth led by muted
demand in overseas market
-0.3
-4.0
3QFY16
1QFY16
3QFY15
1QFY15
3QFY14
-2.4
-0.4
-0.8
0.1
0.2
0.1
0.2
-0.1
-0.6
3QFY13
1QFY13
3QFY16
1QFY16
3QFY15
1QFY15
3QFY14
1QFY14
3QFY13
1QFY13
3QFY12
1QFY12
3QFY11
1QFY11
1QFY14
-3.9
-14 -9-15
1.8
4 -2
-5
-4.8
-13
0.2
5.2
13
1.4
0
-1
0.5
1
32
3QFY12
4 -2
17 18 16 23
19
9,593
9,531
9,984
11,428
9,689
12,541
14,035
11,367
11,520
12,540
12,258
13,274
13,541
14,546
15,026
17,495
15,369
15,068
14,750
16,605
13,253
12,047
10,787
-6
41
Overseas EBITDA Margin (%)
-0.5
32
28
Revenue growth, %YoY
1QFY12
Overseas Revenue (INR m)
Exhibit 20: Overseas operation slipped into losses after
breaking even at EBIDTA levels for the previous 10 quarters
Source: MOSL, Company
Source: MOSL, Company
Exhibit 21: Overseas Sales bifurcation for FY15- Power
portfolio planned to be hived off
Exhibit 22: Consolidated Debt to come down post hive off of
overseas power business and demerger of domestic
consumer business
Source: MOSL, Company
21,905
2QFY16
revenue
and
1,500
2,010
Appliances
4,901
9,836
Cost of Purchase Goods (INR m)
5,061
14,782
the
Electric Lamps
Power driven
pumps
Fans, etc,
45
February 2016
Revenues (INR m)
6,585
Electric
Lamps, 30
Exhibit 24: Segmental breakup of
proportion of outsourced products
Electric fans and
ventillation
equipments
Appliances,
6
Pumps, 20
Source: MOSL, Company
3,933
Exhibit 23: Consumer business revenue break up for FY15(%)
25,265
21,930
4QFY14
Source: MOSL, Company
4QFY15
22,906
2QFY14
26,592
18,515
4QFY13
2QFY15
16,456
2QFY13
Power
50%
9,849
Industrial
34%
4QFY12
Automation
16%
Source: MOSL, Company
49
Crompton Greaves
Exhibit 25: Key operating metrics
FY12
FY13
FY14
FY15
FY16
FY17E
FY18E
27,474
44,474
21,336
18,202
1,456
(456)
112,486
12.4
27,247
46,112
25,927
18,346
3,896
(584)
120,944
7.5
28,235
56,540
28,470
18,164
3,942
(547)
134,805
12.0
27,341
58,399
32,327
18,409
4,187
(531)
140,131
3.1
24,617
45,210
0
19,144
125
(531)
88,564
0.4
26,975
52,136
0
21,058
125
(531)
99,763
8.9
29,004
52,522
0
24,041
125
(531)
105,161
0.0
11.6
-1.6
12.3
11.6
-3.7
8.5
-9.3
10.7
11.6
3.0
9.2
-1.5
11.9
7.1
0.6
8.1
-2.6
12.4
7.6
-9.0
4.0
-6.5
0.0
9.2
-24.0
8.0
-5.0
0.0
10.4
-24.0
8.5
-4.0
0.0
10.5
-24.0
8.3%
-0.2%
4.6%
5.2%
-2.2%
1.2%
9.2%
-1.3%
3.4%
9.7%
-0.5%
4.3%
8.3
-5.3
2.9
2.5
-5.8
-3.3
4.3
-2.6
1.7
5.0
-2.3
2.7
(3,534)
(14,150)
(18,372)
892
(18,214)
(4,859)
2,002
(16,898)
(5,177)
3,431
(15,303)
(3,847)
115
55
119
69
121
66
122
69
4.3
4.0
8.3
3.7
-1.2
2.5
4.4
-0.1
4.3
5.5
-0.5
5.0
Revenue (INR m)
Power Systems - Standalone
Power Systems - Overseas
Consumer Products
Industrial Systems
Others
Less: Inter Segmental
Total sales
Growth %
EBIT Margins (%)
Power Systems - Standalone
Power Systems - Overseas
Consumer Products
Industrial Systems
Others
Adjusted EBIDTA %
Standalone
11.1%
8.3%
7.6%
Subsidiaries
1.7%
-4.3%
1.8%
Consolidated
7.1%
3.2%
5.1%
EPS (NR/Share)
Standalone
7.9
7.1
6.8
Subsidiaries
-2.0
-5.6
-2.9
Consolidated
5.8
1.4
3.9
Net (Debt) / Cash
Standalone
3,188
2,751
4,123
Subsidiaries
(8,059)
(15,430)
(17,901)
Consolidated
(5,465)
(12,681)
(13,781)
Net Working Capital (Days)
Standalone
39
51
67
Consolidated
33
25
30
Standalone EPS (INR/Sh)
Consumer
2.9
3.0
3.8
Non-Consumer
5.0
4.0
3.1
Total
7.9
7.1
6.8
Consumer EPS calculated assuming Segment EBIT = PBT, and approx tax rate of 27%
February 2016
50
Crompton Greaves
Financials and valuations
Income statement
Y/E March
Net Sales
Change (%)
Raw Materials
Staff Cost
Other Mfg. Expenses
EBITDA
% of Net Sales
Depreciation
Interest
Other Income
EO Items (as rep.)
PBT
Tax
Rate (%)
Reported PAT
Extra-ordinary Inc.(net)
Adjusted PAT
Minority Int
Consolidated PAT
Change (%)
(INR Million)
2012
112,486
12.4
76,850
14,662
12,937
8,036
7.1
2,600
567
628
0
5,497
1,821
33.1
3,676
0
3,676
59.9
3,736
-59.7
2013
120,944
7.5
83,461
17,405
16,247
3,832
3.2
2,029
955
1,000
-1,207
640
1,009
157.6
-369
-2,287
1,918
7.3
1,926
-48.4
2014
136,315
12.7
91,353
19,521
19,322
6,120
4.5
2,621
1,366
1,890
924
4,947
2,361
47.7
2,586
924
1,662
-143.4
1,519
-21.2
2015
140,131
2.8
95,305
19,936
18,466
6,424
4.6
2,620
1,443
1,670
252
4,283
2,220
51.8
2,064
252
1,811
29.9
1,841
21.2
2016E
88,564
-36.8
58,016
16,650
12,865
1,032
1.2
2,531
1,070
1,483
1,571
485
997
205.9
-513
1,571
-2,084
29.9
-2,054
-211.5
2017E
99,763
12.6
63,109
18,755
14,492
3,406
3.4
2,586
821
1,813
0
1,811
745
41.1
1,067
0
1,067
29.9
1,097
-153.4
Y/E March
Share Capital
Reserves
Net Worth
Loans
Deffered Tax Liability
Minority Interest
Capital Employed
2012
1,283
34,826
36,109
9,849
-122
157
45,992
2013
1,283
34,332
35,615
18,515
-1,681
95
52,544
2014
1,254
35,192
36,446
21,930
-1,532
118
56,962
2015
1,254
36,906
38,159
27,438
-1,110
203
64,690
2016E
1,254
36,559
37,812
15,038
-1,110
217
56,786
2017E
1,254
37,347
38,600
13,038
-1,110
232
55,589
2018E
1,254
38,573
39,826
13,138
-1,110
246
56,929
Gross Fixed Assets
Less: Depreciation
Net Fixed Assets
Capital WIP
Investments
44,087
23,005
21,083
1,493
7,864
53,424
24,726
28,699
1,965
7,907
59,233
26,825
32,408
2,184
2,989
55,786
26,622
29,164
737
4,414
57,286
29,153
28,133
737
4,414
58,786
31,739
27,047
737
4,414
60,286
34,392
25,894
737
4,414
Curr. Assets
Inventory
Debtors
Cash & Bank Balance
Loans & Advances
55,343
12,233
31,432
4,976
6,702
59,807
16,367
31,605
5,834
6,002
69,171
16,714
35,913
8,150
8,395
72,485
14,552
37,318
6,893
13,722
51,633
9,197
23,585
10,179
8,672
54,558
10,360
26,567
7,861
9,769
58,515
10,920
28,005
9,292
10,298
Current Liab. & Prov.
Creditors
Other Liabilities
Provisions
Net Current Assets
Application of Funds
E: MOSL Estimates; Consolidated Financials
39,790
21,076
14,923
3,791
15,553
45,993
45,834
24,618
16,994
4,222
13,973
52,543
49,790
27,737
17,988
4,064
19,381
56,961
42,109
25,281
12,704
4,124
30,375
64,691
28,131
15,978
8,029
4,124
23,502
56,787
31,167
17,998
9,044
4,124
23,391
55,589
32,630
18,972
9,534
4,124
25,884
56,930
Balance Sheet
February 2016
2018E
105,161
5.4
65,630
19,770
15,276
4,485
4.3
2,653
765
1,760
0
2,827
1,151
40.7
1,676
0
1,676
29.9
1,706
55.6
(INR Million)
51
Crompton Greaves
Financials and valuations
Ratios
Y/E March
Standalone EPS
Consolidated EPS
Growth (%)
Cash EPS
Book Value
DPS
Payout (incl. Div. Tax.)
Valuation (x)
P/E (standalone)
P/E (consolidated)
Cash P/E
EV/EBITDA
EV/Sales
Price/Book Value
Dividend Yield (%)
Profitability Ratios (%)
RoE
RoCE
Turnover Ratios
Debtors (Days)
Inventory (Days)
Creditors. (Days)
Asset Turnover (x)
Leverage Ratio
Debt/Equity (x)
2012
7.9
5.8
-59.7
10.0
56.3
1.2
20.7
2013
6.9
3.0
-48.4
6.3
55.5
1.2
20.1
2014
6.8
2.4
-19.3
6.8
58.2
1.1
11.3
2015
8.3
2.9
21.2
7.1
60.9
0.8
24.0
2016E
2.5
-3.3
-211.5
0.7
60.3
-0.2
24.0
2017E
4.3
1.7
-153.4
5.8
61.6
0.4
24.0
2018E
5.0
2.7
55.6
6.9
63.5
0.7
24.0
27.6
78.0
22.9
21.6
1.0
3.2
0.5
15.0
42.2
17.4
15.3
0.7
2.0
0.6
48.8
-37.8
163.0
80.0
0.9
2.1
-0.1
28.6
70.9
21.1
24.3
0.8
2.0
0.3
24.8
45.6
17.8
18.2
0.8
2.0
0.5
10.7
9.8
-1.0
2.8
7.2
4.3
4.9
4.0
-5.2
0.0
2.9
3.0
4.4
4.1
102
40
68
2.4
95
49
74
2.3
96
45
74
2.4
97
38
66
2.2
97
38
66
1.6
97
38
66
1.8
97
38
66
1.8
0.2
0.4
0.4
0.5
0.1
0.1
0.1
2012
2013
2014
2015
2016E
2017E
2018E
5,497
2,600
567
2,495
-2,310
3,859
0
3,859
-5,758
-1,898
-1,117
-6,875
725
5,894
567
1,044
5,008
1,992
2,984
4,981
1,848
2,029
955
2,177
2,046
4,701
-1,207
3,494
-10,117
-6,623
-43
-10,160
709
8,666
955
897
7,524
857
4,976
5,833
4,023
2,621
1,366
2,211
-3,093
2,707
924
3,631
-6,550
-2,919
4,919
-1,631
-1,146
3,415
1,366
587
316
2,316
5,834
8,150
4,031
2,620
1,443
2,220
-12,250
-8,070
252
-7,818
2,743
-5,075
-1,425
1,348
209
5,508
1,443
589
5,214
-1,257
8,149
6,893
-1,086
2,531
946
997
10,159
5,405
5,201
10,606
-1,500
9,106
6,400
4,930
0
-12,400
946
-136
-12,250
3,286
6,893
10,179
1,811
2,586
778
745
-2,206
1,447
0
1,447
-1,500
-53
0
-1,470
0
-2,000
778
309
-2,294
-2,317
10,179
7,861
2,827
2,653
461
1,151
-1,064
3,266
0
3,266
-1,500
1,766
0
-1,470
0
100
461
480
-366
1,430
7,861
9,292
Cash Flow Statement
Y/E March
PBT before EO Items
Add : Depreciation
Interest
Less : Direct Taxes Paid
(Inc)/Dec in WC
CF from Operations
EO Income
CF from Oper. incl. EO Items
(Inc)/Dec in FA
Free Cash Flow
(Pur)/Sale of Investments
CF from Investments
(Inc)/Dec in Net Worth
(Inc)/Dec in Debt
Less : Interest Paid
Dividend Paid
CF from Fin. Activity
Inc/Dec of Cash
Add: Beginning Balance
Closing Balance
E: MOSL Estimates
February 2016
(INR Million)
52
February 2016
Initiating Coverage | Sector: Capital Goods
KEC International
BSE SENSEX
S&P CNX
23,192
7,048
CMP: INR106
TP: INR130 (+23%)
Buy
Leader in domestic transmission EPC

Stock Info
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
M.Cap. (INR b)
M.Cap. (USD b)
Avg Val ( INR m)
Free float (%)
KECI IN
257.1
165 /72
-14/-9/46
27.3
0.4
154
49.5
Financials Snapshot (INR b)
Y/E March
2015 2016E 2017E
Net Sales
84.7
86.7
94.6
EBITDA
5.1
6.8
7.7
Adj PAT
0.5
1.9
2.4
EPS (INR)
2.1
7.6
9.4
EPS Gr. (%)
-37.6 266.7
24.1
BV/Sh. (INR)
51.7
58.0
65.8
RoE (%)
4.0
13.8
15.1
RoCE (%)
13.0
10.0
10.8
P/E (x)
51.9
14.0
11.3
P/BV (x)
1.9
1.8
1.6


Estimate change
TP change
Rating change
Shareholding pattern (%)
As On
Dec-15 Sep-15 Dec-14
Promoter
50.5
50.5
50.0
DII
25.9
26.0
28.0
FII
6.8
5.9
5.9
Others
16.8
17.6
16.1

FII Includes depository receipts
Stock Performance (1-year)


February 2016
Domestic transmission business witnesses’ strong traction. The domestic
transmission business of KEC Intl. has witnessed strong traction over the last
few years, led by market share gains in PGCIL orders (28% share YTD in FY16)
and pick-up in capex from SEBs. Capex from SEBs is primarily to upgrade
existing transmission networks to 220kv/400kv. KEC’s addressable market has
increased meaningfully as SEBs award projects on turnkey basis. SEB orders
offer better margins and lower competition than PGCIL orders; however,
payment schedule continues to be long (~120 days). KEC has also entered in
the 765kv GIS market, having won orders from PGCIL in FY15, and this opens
another big opportunity (INR20b-25b annually) for the company.
Overseas transmission scenario remains healthy. Overseas T&D business
continues to witness traction from Africa and Middle East(Saudi Arabia, Oman,
UAE) despite a fall in crude oil prices. African countries like Ethiopia, Kenya,
Uganda and Zambia have strong T&D capex pipeline backed by international
agencies. KEC expects business growth of 10-15% in Africa and the Middle East.
The company has witnessed strong order pipeline, driven by spending in Saudi
Arabia (INR20b order book as of 3QFY16; tenders worth INR100b to be
awarded as of 3QFY16).
Current order book provides reasonable medium-term revenue visibility.
Order book stands at INR94b, up 7% YoY and BTB of 1.1x. Order intake in Q316
at INR23b improved 59% YoY, as led by improvement in finalization of orders;
besides, the order pipeline remains healthy (L1 in orders worth INR30b). In the
international market, improved ordering is expected from the MENA region,
Southeast Asia and select African countries like Tanzania, Uganda and Kenya.
Low-margin legacy orders are largely over with Q316 margins at 7.8%(+270bps
YoY).
Competition intensity moderating in PGCIL orders, led by stringent project
clause implementation: Competition intensity has been moderating in large
projects of PGCIL as it has included stringent clauses to ensure smooth
execution of projects. The company has included LD clauses in projects and has
confiscated BG from a vendor for a project while blacklisting vendors who are
unable to complete projects on time. The stand has led to a moderation in
competition intensity. On an average, 8-9 bidders participate in the domestic
tower package order. Top 4 players had ~75% of the market in YTD16.
SAE turns EBITDA positive; PAT breakeven likely in FY17. SAE reported losses
in FY15 as a result of depressed pricing in the North American market, low
order intake in Mexico and weak execution in Brazil. Presently, SAE’s Brazil is
fully booked till FY17. Pricing in the North American market is improving and
with an improvement in execution, the under-recovery of costs is expected to
improve—we expect SAE to break even in FY17.
Valuation and rating. We estimate earnings to grow at a CAGR of 59% over
FY15-18e, driven by an improvement in margins as legacy orders are finished.
We initiate coverage with a Buy and a target price of INR130 (12x FY18E EPS).
53
KEC International
Exhibit 26: Geography wise order book bifurcation
Exhibit 27: Segment wise order book bifurcation
Railways , Water, 2%
4%
Cables ,
12%
AmericasKEC, 10%
Africa and
Central Asia
, 12%
South Asia
including
india , 61%
Middle
East, 16%
Transmissio
n , 82%
Source: MOSL, Company
Exhibit 28: Strong order book providing medium term
revenue visibility
Total Order Book
41.7
Exhibit 29: Well managed net working capital cycle
growth YoY
Networking Capital (Days)
84
94
94
94
FY18E
88
FY17E
80
FY16E
79
FY14
FY11
FY09
59
FY08
116,545
FY18E
102,000
FY14
109,373
94,700
FY13
FY17E
85,720
FY12
6.6
101,331
77,922
FY11
7.9
FY16E
55000
FY10
6.6
95,080
51630
FY09
-6.8
FY15
42000
7.7
FY08
6.5
10.0 10.5
83
FY13
83
22.9
FY12
118
FY10
36.1
Source: MOSL, Company
FY15
South East
Asia, 1%
Source: MOSL, Company
Source: MOSL, Company
Exhibit 30: Revenue growth to pick up with improvement in
the execution cycle of the transmission projects
Exhibit 31: Operating margins to improve with completion
of legacy orders from the order book
Growth YoY (%)
8.2
8.3
FY17E
FY18E
6.0
7.8
FY16E
106,064
FY15
94,560
86,735
6.2
FY14
FY13
79,018
FY14
FY12
69,795
FY13
FY11
58,147
FY12
8.1
5.5
FY09
44,765
FY11
10.4 10.7
12.2
Source: MOSL, Company
February 2016
8.8
FY08
39,072
FY10
9.0
7.2
FY18E
34,289
FY09
2.4
FY17E
28,145
FY08
13.2
FY16E
14.0 14.6
FY15
20.0
84,680
29.9
21.8
Consolidated Operating profit margin
12.6
FY10
Consolidated Revenue (INR m)
37.9
Source: MOSL, Company
54
KEC International
Exhibit 32: Key operating metrics
INR M
FY12
FY13
FY14
FY15
FY16
FY17E
FY18E
85,720
94,700
101,796
95,080
101,331
109,373
116,545
Y-o-Y growth
9.9%
10.5%
7.5%
-6.6%
6.6%
7.9%
6.6%
Order inflow
65,867
74,840
84,820
82,230
92,986
102,602
113,237
Y-o-Y growth
6.2%
13.6%
13.3%
-3.1%
13.1%
10.3%
10.4%
Execution
58,147
69,795
79,018
84,680
86,735
94,560
106,064
Y-o-Y growth
29.9%
20.0%
13.2%
7.2%
2.4%
9.0%
12.2%
1.47
1.36
1.29
1.12
1.17
1.16
1.10
Order Book
85,720
94,701
101,796
95,080
114,206
135,123
155,170
T&D (incl Power Systems, Telecom)
67,719
77,560
80,784
71,310
87,961
104,500
118,057
SAE Towers
7,543
7,292
8,568
9,508
9,200
9,660
10,143
Cables
1,457
1,042
2,448
5,705
7,240
9,926
14,512
Railways
3,429
4,356
4,488
4,754
5,922
6,999
8,182
Water
5,572
4,451
5,508
3,803
3,883
4,037
4,276
Order Intake
65,867
74,840
84,820
82,230
92,986
102,602
113,237
T&D (incl Power Systems, Telecom)
51,500
51,714
59,544
55,916
69,896
83,875
104,843
SAE Towers
7,753
10,253
10,009
12,335
13,568
15,603
17,944
Cables
6,020
7,640
8,567
11,512
11,512
12,663
14,563
Railways
1,430
5,160
2,375
2,549
2,880
3,168
3,643
Water
5,470
1,640
4,411
0
1,400
1,540
1,694
Revenues
58,150
69,790
79,010
84,590
86,735
94,560
106,064
T&D (incl Power Systems, Telecom)
Closing order book
Book to bill ratio
40,730
48,470
61,160
64,840
66,120
73,221
83,891
SAE Towers
9,130
10,320
8,540
8,030
7,606
7,886
8,280
Cables
5,710
5,520
6,310
9,070
9,977
9,977
9,977
Railways
1,640
2,700
1,690
1,330
1,712
2,091
2,461
940
2,780
1,310
1,320
1,320
1,386
1,455
30.0%
20.0%
13.2%
7.1%
2.5%
9.0%
12.2%
17.4%
19.0%
26.2%
6.0%
2.0%
10.7%
14.6%
Water
Revenues, % YoY
T&D (incl Power Systems,
Telecom)
157.9%
13.0%
-17.2%
-6.0%
-5.3%
3.7%
5.0%
Cables
19.0%
-3.3%
14.3%
43.7%
10.0%
0.0%
0.0%
Railways
80.2%
64.6%
-37.4%
-21.3%
28.7%
22.1%
17.7%
195.7%
-52.9%
0.8%
0.0%
5.0%
5.0%
10,351
15,133
19,830
18,388
19,530
20,104
20,848
79
80
88
84
94
94
94
SAE Towers
Water
Net Debt (INR M)
Reported NWC (Days)
February 2016
55
KEC International
Financials and valuations
Income Statement
Y/E March
Total Revenues
Change (%)
Raw Materials
Staff Cost
Other Expenses
EBITDA
% of Total Revenues
Other Income
Depreciation
Interest
PBT
Tax
Rate (%)
Adjusted PAT
Change (%)
Exceptional Items
Reported PAT
Change (%)
2012
58,147
29.9
43,173
4,274
5,987
4,713
8.1
113
479
1,597
2,749
984
35.8
1,765
-17.6
328
2,093
1.8
2013
69,795
20.0
53,301
4,829
7,852
3,814
5.5
161
561
1,944
1,470
818
55.7
652
-63.1
-1
650
-68.9
2014
79,018
13.2
59,594
5,661
8,831
4,933
6.2
138
705
2,633
1,733
883
51.0
849
30.3
-182
668
2.7
2015
84,680
7.2
64,527
5,865
9,168
5,120
6.0
116
881
3,089
1,266
561
44.3
705
-16.9
905
1,610
141.1
2016E
86,735
2.4
64,532
6,007
9,391
6,805
7.8
127
893
2,802
3,237
1,295
40.0
1,942
175.4
0
1,942
20.6
2017E
94,560
9.0
70,034
6,549
10,238
7,739
8.2
241
958
3,197
3,826
1,416
37.0
2,410
24.1
0
2,410
24.1
(INR Million)
2018E
106,064
12.2
78,441
7,346
11,484
8,794
8.3
391
1,022
3,677
4,486
1,660
37.0
2,826
17.2
0
2,826
17.2
Balance Sheet
Y/E March
Share Capital
Reserves
Net Worth
Minority Intetest
Loans
Deferred Tax Liability
Capital Employed
2012
514
10,564
11,078
0
12,380
513
23,971
2013
514
10,958
11,472
0
16,690
621
28,783
2014
514
11,402
11,916
0
21,270
514
33,699
2015
514
12,784
13,298
0
20,451
527
34,277
2016E
514
14,399
14,913
0
23,451
527
38,892
2017E
514
16,404
16,918
0
26,451
527
43,897
(INR Million)
2018E
514
18,755
19,269
0
29,451
527
49,248
10,949
2,852
8,097
1,122
0
3,209
43,081
4,401
29,448
2,029
5,104
2,099
31,538
21,835
9,702
20,274
23,971
13,332
3,519
9,813
301
0
3,424
48,809
3,960
34,305
1,556
6,613
2,375
33,564
24,671
8,893
23,252
28,783
14,026
4,283
9,742
180
0
3,778
60,197
5,052
43,390
1,440
8,520
1,794
40,197
32,131
8,067
26,815
33,699
13,393
4,747
8,646
164
0
3,943
64,519
4,764
38,529
2,063
9,507
9,655
42,995
33,248
9,747
30,052
34,277
14,396
5,640
8,757
164
0
3,943
70,035
4,880
41,841
3,921
9,738
9,655
44,006
34,055
9,951
34,761
38,892
15,400
6,597
8,803
1,464
0
3,943
74,963
5,320
43,025
6,347
10,616
9,655
45,276
34,537
10,739
39,208
43,897
Gross Fixed Assets
Less: Depreciation
Net Fixed Assets
Capital WIP
Investments
Goodwill
Curr. Assets
Inventory
Debtors
Cash & Bank Balance
Loans & Advances
Other Current Assets
Current Liab. & Prov.
Creditors
Other Liabilities
Net Current Assets
Application of Funds
E: MOSL Estimates
February 2016
16,403
7,619
8,784
2,764
0
3,943
84,393
5,967
48,259
8,604
11,908
9,655
50,636
38,738
11,898
44,436
49,248
56
KEC International
Financials and valuations
Ratios
Y/E March
Basic (INR)
Adj EPS
Cash EPS
Book Value
DPS
Payout (incl. Div. Tax.)
Valuation (x)
P/E
EV/EBITDA
EV/Sales
Price/Book Value
Dividend Yield (%)
Profitability Ratios (%)
RoE
RoCE
Turnover Ratios
Debtors (Days)
Inventory (Days)
Creditors. (Days)
Asset Turnover (x)
Leverage Ratio
Debt/Equity (x)
2012
2013
2014
2015
2016E
2017E
2018E
6.9
8.7
43.1
1.2
14.7
2.5
4.7
44.6
0.5
19.8
3.3
6.0
46.3
0.6
23.1
2.7
6.2
51.7
0.9
14.4
7.6
11.0
58.0
1.1
14.4
9.4
13.1
65.8
1.3
14.4
11.0
15.0
75.0
1.6
14.4
15.4
8.0
0.6
2.5
1.1
41.8
11.1
0.6
2.4
0.5
32.1
9.5
0.6
2.3
0.6
38.6
8.9
0.5
2.0
0.8
14.0
6.9
0.5
1.8
1.0
11.3
6.1
0.5
1.6
1.3
9.6
5.5
0.5
1.4
1.5
20.4
13.4
5.8
5.9
5.7
6.4
12.8
10.0
13.8
10.0
15.1
10.8
15.6
11.2
185
28
137
2.4
179
21
129
2.4
200
23
148
2.3
166
21
143
2.5
176
21
143
2.2
166
21
133
2.2
166
21
133
2.2
1.1
1.5
1.8
1.5
1.6
1.6
1.5
Cash Flow Statement
Y/E March
PBT before EO Items
Depreciation
Interest
Direct Taxes Paid
(Inc)/Dec in WC
CF from Operations
Others
CF from Oper. Incl. Others
2012
3,243
479
1,497
-923
1,566
5,863
-373
5,490
2013
1,470
561
1,822
-976
-3,738
-862
-6
-868
2014
1,551
705
2,536
-1,126
-3,957
-291
198
-93
2015
2,611
881
2,987
-1,221
-3,206
2,052
-523
1,529
2016E
3,237
893
0
-1,295
-2,644
191
0
191
2017E
3,826
958
0
-1,416
-1,233
2,135
0
2,135
(Inc)/Dec in FA
Free Cash Flow
Investment in liquid assets & Others
CF from Investments
-493
4,997
168
-325
-1,349
-2,217
140
-1,210
-1,441
-1,534
101
-1,340
1,165
2,694
83
1,249
-1,004
-812
0
-1,004
-2,304
-169
0
-2,304
-2,304
-268
0
-2,304
-2,612
-1,629
-355
0
-4,596
3,945
-1,983
-357
0
1,605
4,101
-2,634
-150
0
1,317
1,065
-3,047
-175
0
-2,157
3,000
0
-327
0
2,673
3,000
0
-405
0
2,595
3,000
0
-475
0
2,525
569
1,460
2,029
-473
2,029
1,556
-116
1,556
1,440
623
1,440
2,063
1,861
2,060
3,921
2,426
3,921
6,347
2,256
6,347
8,604
(Inc)/Dec in Debt
Interest Paid
Dividend Paid
Others
CF from Fin. Activity
Inc/Dec of Cash
Add: Beginning Balance
Closing Balance
E: MOSL Estimates
February 2016
(INR Million)
2018E
4,486
1,022
0
-1,660
-1,813
2,035
0
2,035
57
February 2016
Update | Sector: Capital Goods
Larsen & Toubro
BSE SENSEX
23,192
S&P CNX
7,048
Stock Info
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
M.Cap. (INR b)
M.Cap. (USD b)
Avg Val ( INR m)
Free float (%)
LT IN
935.5
1,893 /1,017
5 /-22/-12
1,036.5
15.2
3,452
100
Financials Snapshot (INR b)
Y/E March
Sales
EBITDA
Adj PAT *
EPS (INR)*
EPS Gr. (%)
BV/Sh (INR)
RoE (%)
RoCE (%)
P/E (x)*
P/BV (x)
* Consolidated
2015 2016E 2017E
920
113
44
47
-4.2
437.3
11.2
6.5
23.5
2.7
1,016
113.2
41.0
43.8
-7.1
469.2
9.7
5.7
25.3
2.5
1,158
144.8
53.9
57.6
31.3
510.5
11.8
6.7
19.2
2.4
Estimate change
TP change
Rating change
Shareholding pattern (%)
As On
Dec-15 Sep-15 Dec-14
Promoter
0.0
0.0
0.0
DII
38.4
37.1
36.1
FII
18.6
20.5
20.3
Others
43.0
42.4
43.6
FII Includes depository receipts
Stock Performance (1-year)
February 2016
CMP: INR1,108
TP: INR1,440 (+30%)
Best play on the capex recovery in India
Buy
All set to benefit from capex recovery in India: L&T is well positioned to benefit
from the capex recovery cycle in key business segments like railways (INR8.6t
capex over the next five years), T&D (INR2.6t capex in the 13th Five-Year Plan), and
defense (capex of INR2.6t over medium term). Over the years, L&T has
continuously evolved through developing new skill sets and competencies to
benefit from emerging trends. This has also enabled it to weather the volatility
better than peers.
Improvement in asset utilization to drive return ratios of the company: Over the
years, L&T has invested heavily in creating manufacturing assets like shipyards,
BTG, forgings—which as of now does not contribute meaningfully to the bottomline, owing to muted demand and underutilization of assets. Manufacturing
businesses present interesting possibilities in the longer term, including defense
privatization. Several of these businesses are difficult to replicate and L&T is
strongly positioned as a dominant player. The management intends to improve
the consolidated ROE from current levels of 14% to 20% in the medium term.
Capital structure correction a key focus area: L&T’s increased capital allocation
toward subsidiaries and associate companies has been an area of discomfort. We
understand that L&T is attempting to rationalize its capital allocation through
monetization of matured assets (e.g. Kattupalli Port), exit from non-core activities
and fund infusion by Canada Pension Plan (INR20b in two tranches). The intent is
‘portfolio churn’ and to capture value accretion at the initial stages of project life
cycle. The management is making efforts to improve the consolidated ROE from
the current 14% to 20% over the next three years. Also, infotech/technology
services business IPO is expected by July 2016. L&T Realty has 35msf of projects
under development, which will aid value unlocking.
Overseas order contribution to decline from 38% in FY14 to ~18% in FY18: FY14
was the inflexion point in L&T’s attempt to diversify geographically, with intake at
INR380b (32% of E&C v/s 18% in FY13). New geographies of Saudi and Qatar
accounted for majority of the intake, while traditional countries like Oman and
UAE were stable. We calculate that L&T’s market share increased from ~1-2% till
CY11 to 4-5% in CY13/14 in the Middle East. Going forward, we believe L&T will
continue to focus on traditional geographies; thus, the contribution will decline to
normative levels of ~17-18%. Given the sharp decline in crude prices, we believe
the opportunity pie—particularly in hydrocarbons—has shrunk. Given the huge
losses of INR12b+ in FY15 in hydrocarbons and possibilities of liquidated damages,
management is expected to be very cautious in picking up new orders.
58
Larsen & Toubro
Valuation and Rating



We maintain Buy with a SOTP based price target of INR1,440/sh (E&C business
at 20x FY18E).
Our target PER multiple of 20x is lower than the 25x average multiple during
FY07-11, a period when the domestic project ordering was quite robust.
Manufacturing businesses like Power BTG, Shipbuilding and Special Forgings
are expected to witness improvement in order intake in FY18, led by pick-up in
project awards in Power BTG, Defence and Nuclear segments.
Exhibit 33: L&T SOTP value
Method
Construction Business
L&T Standalone
L&T Hydrocarbons
International Ventures (L&T FZE)
Service Segments
Infotech / Technology
Finance Sevices incl. general insurance
Valuation
multiple
Value
(INR b)
Value
(INR/sh)
FY18E PER (x)
18.0
967
1,033
FY18E EPS
18.0
10
11
FY18E PBV (x)
1.0
11
12
FY18E PER (x)
11.0
209
223
1.5
132
90
FY18E PBV (x)
Rationale
Lower multiple on slowdown in order inflow
At par to mid-tier IT companies
At discount to peer group given relatively lower
ratios
Sapura Shipping
L&T Realty
Asset Ownership / Project Developer
Infrastructure Development Projects
Power Development Projects
Manufacturing Ventures
Power Equipments
FY18E PBV (x)
1.5
1
2
FY18E PER (x)
15.0
35
38
FY18E PBV (x)
0.5
42
45
At 0.5x Book Value to capture the macro volatility
FY18E PBV (x)
1.0
27
29
At Book Value, given Case 2 bid
15.0
20
22
Shipbuilding / Container Port
Special Steel and Heavy Forgings
FY18E PBV (x)
1.0
20
21
Expect industry project awards to sustain at 1518GW pa
Increased possibility of Defence (Naval) orders
1.0
8
9
Less: Holding Company Discount of 20%
Total
FY18E PER (x)
FY18E PBV (x)
Possibility of Nuclear project awards to commence
in FY17
-96
1,441
Source: MOSL, Company
February 2016
59
Larsen & Toubro
Exhibit 34: Revenue contribution from overseas projects to
increase as key projects start contributing to topline
Revenue (INRb)
24.5 26.2
Overseas Rev as a % to total Rev
34.5 34.4 33.4
30.4 32.4
Exhibit 35: EBITDA and EBITDA margins
Adj EBIDTA (INR b)
14.8
12.6
12.3
11.1
12.5
13.1
171
113
FY15
FY18E
108
FY14
145
99
FY13
FY17E
87
FY12
113
47
FY11
FY16E
64
FY11 FY12 FY13 FY14 FY15 FY16E FY17E FY18E FY19E FY20E
FY10
1,316
1,162
1,012
853
720
619
624
597
9.9
465
377
13.3
9.6
21.8
9.8
13.5
EBIDTA Margin (%)
Source: MOSL, Company
Source: MOSL, Company
Exhibit 36: Expect order inflow from domestic market to
improve as capex activity picks up momentum
Exhibit 37: Overseas orders to decline led by weakness in
crude oil prices
YoY growth
943
1,084
1,214
1,336
67
152
FY15
FY16E
FY17E
FY18E
FY11
FY12
FY13
FY14
FY15
Source: MOSL, Company
FY16E
FY17E
9
FY18E
Source: MOSL, Company
Total Invst, incl Advances in Subs
% of CE in Subs (Equity + L&A)
36.9 35.9 36.9
30.7
28.3
RoE
41.8
40.7
RoE(Core E&C business ex investment in subs)
38.3
29.5 30.1 30.0
20.0
25.1
13
26
53
76
105
126
140
189
204
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
Source: MOSL, Company
February 2016
2
Exhibit 39: RoE excluding investment in subsidiary stands
robust
Exhibit 38: Investment in subsidiaries
16.8
(10)
393
627
FY14
145
670
669
FY13
537
FY12
(28)
(5)
284
15
(20)
260
(6)
127
10
256
12
10
YoY growth
171
131
50
25
FY11
Overseas
284
Domestic Orders
21.0
24.5
18.3 18.9 16.8
22.2
25.9
21.3
14.2 15.6 13.3
15.8
10.3
20.6
12.8
FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16E FY17E FY18E
Source: MOSL, Company
60
Larsen & Toubro
Exhibit 40: Operating metrices
(INR billion)
Consolidated E&C Business, incl
Hydrocarbons
Order Intake
- Domestic
- Overseas
FY12
FY13
FY14
FY15
FY16E
FY17E
FY18E
689
536
153
815
670
145
1,020
628
383
1,227
943
284
1,072
801
271
1,178
930
249
1,253
1,023
230
-6.4%
-19.9%
128.1%
18.3%
25.0%
-5.0%
24.1%
-6.2%
163.7%
21.4%
50.2%
-25.8%
-12.6%
-15.0%
-4.6%
9.9%
16.0%
-8.2%
6.3%
10.0%
-7.5%
465
419
46
597
467
130
624
471
153
619
457
162
688
477
211
795
559
237
881
642
239
23.4%
23.1%
26.0%
28.6%
11.4%
184.3%
7.4%
4.2%
19.0%
-0.8%
-3.0%
6.0%
11.2%
4.5%
30.0%
15.6%
17.0%
12.4%
10.8%
15.0%
0.9%
Analyzing Domestic Intake
Large Projects (INR15b+)
Base Orders (sub INR15b)
536
143
393
670
145
525
628
67
561
943
411
532
801
200
601
930
380
550
1,023
473
550
Consolidated Order Intake
% YoY
Consolidated Revenues
% YoY
842
1,029
22.2%
745
15.8%
1,272
23.6%
851
14.2%
1,554
22%
920
8.0%
1,400
-10%
1,016
10.4%
1,619
16%
1,158
14.0%
1,714
6%
1,305
12.7%
13.1%
11.3%
11.9%
12.2%
12.0%
13.2%
8.4%
11.6%
8.3%
9.5%
9.7%
10.5%
10.0%
10.7%
Standalone EPS*
Consolidated EPS
44.9
49.1
38.3
51.8
43.7
49.3
41.1
47.2
33.6
43.8
48.2
57.6
57.4
67.9
Cons. EPS Composition
(INR/share)
Infotech
Finance
Manufacturing
Developmental Business
E&C / Electrical Products, etc
4.7
4.7
-1.1
-2.9
43.9
6.2
5.8
-3.0
-2.9
45.6
6.9
4.0
-7.2
-4.5
50.0
11.9
4.9
-6.5
4.8
32.1
15.8
5.5
-6.0
-6.9
35.4
18.3
5.0
-5.4
-12.6
52.2
20.6
5.9
-4.3
-12.0
57.8
15.6
12.8
25.5
13.3
11.2
25.5
10.3
9.7
22.7
12.8
11.8
22.7
13.7
12.7
22.7
Order Intake, % YoY
- Domestic
- Overseas
Revenues
- Domestic
- Overseas
Revenues, % YoY
- Domestic
- Overseas
EBIDTA Margins
E&C, Consolidated
E&C, Standalone
642
16.8
14.2
RoE (%) [Standalone]
17.0
15.3
RoE (%) [Consolidated]
Wkg. Capital (% of sales) - Adj for
17.0
26.5
Subs Adv
* Standalone EPS, excluding dividend received from subsidiary companies
February 2016
61
Larsen & Toubro
Financials and valuations
Income Statement
Y/E March
Net Revenues
Growth Rate (%)
Manufacturing Expenses
Staff Cost
S G &A Expenses
EBITDA
Change (%)
Adj EBIDTA
EBITDA Margin (%)
Depreciation
EBIT
Net Interest
Other Income
Profit before Tax
Tax
Effective Tax Rate (%)
Reported Profit
Less:Addl tax on dividend by Subs
Less: Minority Interest
Add: Profits of Associates
EO Adjustments
Adjusted Profit
Growth (%)
Cons. Profit (Reported)
(INR Million)
2012
642,307
31.0
472,185
49,950
33,577
86,885
83.6
86,885
13.5
15,803
71,082
11,019
8,290
68,353
22,826
33.4
46,095
87
348
462
568
45,555
269.4
46,123
2013
744,980
16.0
546,888
62,446
36,359
99,287
14.3
99,287
13.3
16,371
82,917
21,243
10,557
72,231
23,790
32.9
51,808
130
722
384
3,368
47,973
5.3
51,341
2014
851,284
14.3
616,948
80,276
46,517
107,543
8.3
107,543
12.6
14,458
93,085
31,414
9,819
71,490
26,076
36.5
48,817
208
-382
93
3,402
45,680
-4.8
49,083
2015
920,046
8.1
672,937
79,222
54,531
113,356
5.4
113,356
12.3
26,225
87,131
28,507
10,072
68,696
22,836
33.2
49,337
0
1,710
21
3,477
44,171
-3.3
47,648
2016E
1,016,017
10.4
751,845
90,731
60,219
113,222
-0.1
113,222
11.1
25,903
87,319
30,076
11,760
69,003
23,461
34.0
48,638
0
4,547
21
3,096
41,016
-7.1
44,112
2017E
1,158,396
14.0
841,537
103,445
68,658
144,756
27.9
144,756
12.5
32,352
112,404
36,814
14,901
90,491
32,577
36.0
57,914
0
4,084
21
0
53,851
31.3
53,851
Y/E March
Equity Capital
Reserves and Surplus
Net Worth
Debt
Deferred Tax Liability
Minority Interest
Capital Employed
2012
1,225
287,811
289,036
471,501
44,995
17,535
827,898
2013
1,231
337,366
338,597
619,936
1,837
26,529
986,899
2014
1,854
375,262
377,116
801,529
3,375
31,792
1,213,812
2015
1,859
407,232
409,091
905,714
-1,847
49,986
1,362,944
2016E
1,859
437,108
438,967
1,022,712
-1,847
54,533
1,514,366
2017E
1,859
475,768
477,627
1,049,007
-1,847
58,617
1,583,405
2018E
1,859
521,807
523,666
1,058,385
-1,847
63,221
1,643,426
Gross Fixed Assets
Less : Depreciation
Add : Capital WIP
Net Fixed Assets
Investments
Inventory
Sundry Debtors
Cash & Bank
Loans & Advances
Other Current Assets
Current Assets
Current Liabilities
Net Current Assets
Capital Deployed
E: MOSL Estimates
255,174
61,380
149,127
342,921
87,895
42,299
204,054
35,221
74,922
153,396
757,623
360,755
396,869
827,898
379,822
75,670
113,068
417,220
87,675
51,874
230,149
35,715
84,536
201,930
924,213
442,209
482,004
986,899
411,347
88,824
143,237
465,760
81,090
55,275
263,846
40,966
134,755
254,934
1,150,574
483,612
666,962
1,213,812
454,711
107,331
155,237
502,618
96,121
65,182
300,894
57,562
193,020
246,883
1,335,860
571,655
764,206
1,362,944
534,711
133,234
155,237
556,714
96,121
71,981
332,280
109,400
213,154
272,635
1,492,815
631,284
861,531
1,514,366
614,711
165,586
155,237
604,362
96,121
82,068
347,107
117,427
243,024
310,841
1,602,671
719,749
882,922
1,583,405
674,711
203,582
155,237
626,367
96,121
92,467
391,090
113,065
273,818
350,228
1,731,888
810,950
920,938
1,643,426
Balance Sheet
February 2016
2018E
1,305,178
12.7
940,326
116,553
77,357
170,942
18.1
170,942
13.1
37,995
132,947
40,363
15,559
108,143
40,013
37.0
68,130
0
4,604
21
0
63,548
18.0
63,548
(INR Million)
62
Larsen & Toubro
Financials and valuations
Ratios
Y/E March
Basic (INR)
Standalone EPS Adj
Growth (%)
Consolidated EPS Adj
Growth (%)
Con. EPS (Fully Diluted)
Growth (%)
Cash EPS
Book Value
Dividend Per Share
Div. Payout (Incl. Div Tax ) %
Valuation (x)
P/E (Standalone)
P/E (Consolidated)
P/E (Consolidated) (Fully Diluted)
Price / CEPS
EV/EBITDA
EV/ Sales
Price / Book Value
Dividend Yield
Return Ratio (%)
RoE
RoCE
Turnover Ratios
Debtors (Days)
Inventory (Days)
Asset Turnover (x)
Leverage Ratio
Current Ratio (x)
D/E (x)
2012
2013
2014
2015
2016E
2017E
2018E
47.5
22.1
49.1
269.4
49.1
269.4
66.2
311.8
11.1
22.5
49.3
3.7
51.8
5.3
51.8
5.3
69.4
365.3
11.5
22.2
52.9
7.4
49.3
-4.8
49.3
42.8
64.9
406.9
14.2
28.9
50.2
-5.1
47.2
-4.2
47.2
-4.2
75.2
437.3
13.0
27.5
42.7
-15.0
43.8
-7.1
43.8
-7.1
71.5
469.2
10.2
23.4
58.2
36.4
57.6
31.3
57.6
31.3
92.1
510.5
14.0
24.3
68.4
17.5
67.9
18.0
67.9
18.0
108.5
559.8
16.4
24.2
20.9
22.5
22.5
17.1
16.6
2.2
3.0
1.3
22.1
23.5
23.5
14.7
16.6
2.1
2.7
1.2
26.0
25.3
25.3
15.5
17.2
2.0
2.5
0.9
19.0
19.2
19.2
12.0
13.6
1.9
2.4
1.3
19.0
16.3
16.3
10.2
11.6
1.7
2.2
1.5
17.0
8.8
15.3
8.3
12.8
7.2
11.2
6.5
9.7
5.7
11.8
6.7
12.7
7.5
116.0
24.0
0.8
112.8
25.4
0.8
113.1
23.7
0.7
119.4
25.9
0.7
119.4
25.9
0.7
109.4
25.9
0.7
109.4
25.9
0.8
2.1
0.9
2.1
1.0
2.4
1.2
2.3
1.2
2.4
1.3
2.2
1.3
2.1
1.1
2012
46,123
15,803
-3,231
-134,620
-75,925
-77,087
-153,012
4,263
-73,037
9,155
143,215
7,275
-11,916
147,729
-1,233
36,455
35,222
2013
52,057
16,371
-43,158
-84,641
-59,372
-90,670
-150,042
220
-90,237
5,057
148,436
8,994
-12,385
150,102
493
35,222
35,715
2014
49,020
14,458
1,538
-179,708
-114,692
-62,998
-177,690
6,585
-56,413
4,822
181,593
5,263
-15,322
176,355
5,251
35,715
40,966
2015
47,648
26,225
-5,221
-80,647
-11,995
-63,083
-75,078
-15,032
-78,114
-1,570
104,185
18,194
-14,103
106,705
16,596
40,966
57,562
2016E
44,112
25,903
0
-45,488
24,527
-80,000
-55,473
0
-80,000
-3,096
116,998
4,547
-11,139
107,311
51,838
57,562
109,400
2017E
53,851
32,352
0
-13,364
72,839
-80,000
-7,161
0
-80,000
0
26,295
4,084
-15,191
15,188
8,027
109,400
117,427
Cash Flow Statement
Y/E March
PBT before EO Items
Add : Depreciation
Change in diff tax liability
(Inc)/Dec in WC
CF from Operations
(Inc)/Dec in FA
Free Cash Flow
(Pur)/Sale of Investments
CF from Investments
(Inc)/Dec in Net Worth
(Inc)/Dec in Debt
Change in Minority Interest
Dividend Paid
CF from Fin. Activity
Inc/Dec of Cash
Add: Beginning Balance
Closing Balance
E: MOSL Estimates
February 2016
(INR Million)
2018E
63,548
37,995
0
-42,378
59,165
-60,000
-835
0
-60,000
0
9,378
4,604
-17,509
-3,527
-4,362
117,427
113,065
63
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36