BHEL has the highest leverage; L&T and TMX key beneficiaries

Capital Goods

BTG Ordering: Emerging from the Eclipse



Our statistical analysis of the macro data-points on demand and supply

dynamics in the power sector suggests that the new cycle of powergen capex

could commence over the next 12-15 months.

From a market structure that was threatened by: i) intense competition from

Chinese, Koreans and Japanese companies ii) and, possibility of ~5-6 players

in the domestic market, BTG sector is undergoing a metamorphosis. Imported

products have witnessed erosion of competitiveness, while the domestic players

are engaging into disciplined 'aggression'.

About the Cover



We track the journey and evolution of the Indian Power sector over the last 20 years, and juxtapose the same

on the Capital Goods Index. Electricity Act 2003 was a watershed event, a panacea for the economic viability.

Between 2007 and 2009, several events acted as tipping points that fuelled a fresh wave of private investments

in power generation. However, 'reversal to mean' happened rather fast, given several challenges and constraints.



Over the last 12-18 months, there have been a series of attempts by the government to address various

contentious issues surrounding SEB finances, fuel availability, tariff review, etc. The progress has been encouraging,

and an eclipse always ends.

BTG Ordering: Emerging from the Eclipse

Page No.

Executive Summary

..........................................................................................................

How to play the theme

....................................................................................................

Key Exhibits

....................................................................................................................

5-6

BTG ordering: Emerging from the 'Eclipse'

................................................................

7-13

Disciplined Competitive 'Aggression'

.......................................................................

14-18

Companies

..................................................................................................................

19-42

BHEL ..................................................................................................... 19

Larsen & Toubro ................................................................................... 27

Thermax

....................................................................................................

Prices as on December 5, 2013

Recommended Reading: India's Capex J-Curve - Comforting, yet Troubling (April 2013)

India's capex J-curve poised to kick-start



India's capex J-Curve will be kick-started by (1) reorientation of fiscal expenditure, and

(2) higher capex by Public Sector Units. This will be followed by revival in the industrial

cycle culminating with greenfield/mega projects.

Historical analysis (1995 onwards) suggests that government capex is largely stable

across cycles, while private capex has been volatile. History seems to be repeating itself

- even now, government projects adds continue to be at normative levels of INR1,600b/

qtr whereas private projects adds are in negative territory for last 4 quarters.

Policy initiatives offer ray of hope; but execution challenges persist across sectors.

9 December 2013

9 December 2013

Sector

Capital Goods

BTG ordering: Emerging from the 'Eclipse'

BHEL has the highest leverage; L&T and TMX key beneficiaries

Powergen capex: Emerging from the 'Eclipse'

Our statistical analysis of the macro data-points on demand and supply dynamics in

the power sector suggests that the new cycle of powergen capex could commence

over the next 12-15 months. Despite aggressive assumptions on capacity additions

and PLF; the electricity generation CAGR till FY19 when juxtaposed with aggregate

FY13 demand stands at 8.8% and compares with last 10-years electricity consumption

CAGR of 6.2%. Thus, we believe that SEBs will, sooner than later, start planning

about capacity additions.

'Timing the recovery' remains the key moving variable. However we believe that

what matters is not 'timing the project awards', but the time when markets believe

that project awards 'could possibly' commence. And that time is now.

Self-correction (2010-2012)

Reality hits! SEBs curtail high-

cost power. Hibernation in

project awards

Expect 20GW of project awards, interplay of structural factors

During FY12 and FY13, power BTG project awards stood at just ~10GW pa, including

13GW of cumulative capacities being awarded under the bulk tender, and compares

with annual run-rate of 25-30GW pa during FY07-10. Going forward, we believe that

the pipeline is showing initial signs of recovery with projects of ~20GW likely to be

awarded in 12-15 months. This could be a Tipping point, particularly for the

equipment manufacturers, given that industry capacity for super-critical boilers

and turbines stands at ~21-24GW pa.

Redefining period (2013

onwards)

Survival of the fittest! Sound

capacity plans see light of

day

An important driver has been the 'Case 2' Bidding Document (approved in Sept 2013)

with bidding for 9.3GW has already been initiated. The trend of increased project

awards could possibly be supported by interplay of structural factors: i) Improved

demand planning by distribution companies ii) Ensuring financial viability of the

Distribution business models iii) Coal mine allocations post gap of 5 years, etc.

Metamorphosis: Disciplined competitive 'aggression'

From a market structure that was threatened by: i) intense competition from

Chinese, Koreans and Japanese companies ii) and, possibility of ~5-6 players in the

domestic market, BTG sector is undergoing a metamorphosis. Imported products

have witnessed erosion of competitiveness, while the domestic players are

witnessing disciplined 'aggression'. Business models from state gencos around

vendor financing have witnessed muted bidding interest and unviable bids; and

thus its again back to basics.

Target price snapshot (INR)

CMP

BHEL

171

L&T 1,087

TMX

670

210

1,186

850

Upside

23%

27%

For private capacities, overseas orders have also started trickling-in

We understand that there have been few international orders received by the new

manufacturing capacities of L&T-Mitsubishi and JSW-Toshiba; while TMX-Babcock

JV is also qualified as a global manufacturing base. The quantum of orders is not

meaningful initially; we believe that the opportunities exist to scale up the export

business over the next few years. Currency depreciation has also made Indian

manufacturing more competitive.

Investors are advised to

refer through disclosures

made at the end of the

Research Report.

Capital Goods

How to Play the Theme: BHEL best positioned as cyclical factors support recovery

BHEL

Y/E Mar

2014E

Net Sales 395.6

EBITDA

47.2

Adj PAT

35.1

EPS (INR)

14.4

EPS Gr. (%) (46.4)

BV/Sh.(INR) 133.3

RoE (%)

11.1

RoCE (%)

11.4

Payout (%) 30.0

Valuations

P/E (x)

11.9

P/BV (x)

1.3

EV/EBITDA (x) 7.5

Div Yield (%) 2.4

*Consolidated

CMP: INR171



2015E 2016E

325.8 358.8

33.7 47.6

23.6 36.7

9.6 15.0

(32.9) 55.6

139.6 149.3

7.1 10.4

7.3 10.7

30.0 30.0

17.8

1.2

9.0

1.7

11.4

1.1

5.1

2.6

TP: INR210

Rating: Buy

Upside:23%

Financials & Valuations (INR b)

BHEL is strongly exposed to cyclical factors: i) Contribution margins at ~40-41%

vs expected EBIDTA margin of 11.9% in FY14, leading to a meaningful operating

leverage ii) Core NWC stable at ~200 days; cyclical factors of Retention money

(at ~200 days in FY14E vs 55-60 days in FY07-09) and customer advances

(deteriorated from 63% of revenues in FY09 to 34% in FY13) that impacted

reported NWC are expected to normalize, as we expect BTB to increase from

2.2x currently to 3x in FY15/16E.

We expect Free Cash Flows to improve from ~INR16-19b in FY13/14E to

~INR75-88b in FY15/16E, leading to a meaningful increase in net cash from

INR63b in FY13 to INR174b in FY16E (~43% of current market cap). We upgrade

the stock to

Buy

with a Price target of INR210/sh (14x FY16E).



CMP: INR1,087



TP: INR1,186

Rating: Buy

Upside:9%

Financials & Valuations (INR b)

Y/E Mar

2014E 2015E 2016E

Sales

664.8 745.5 833.7

EBITDA

67.6 76.3 88.2

Adj PAT *

40.4 48.3 59.4

EPS (INR)* 43.8 52.4 64.3

EPS Gr. (%) -18.1 19.6 22.9

BV/Sh (INR) 351.4 392.8 440.4

RoE (%)

14.5 14.4 14.8

RoCE (%)

12.4 12.5 12.9

Payout (%) 27.7 26.9 26.9

Valuations

P/E (x)*

24.8 20.7 16.9

P/BV (x)

3.1

2.8

2.5

EV/EBITDA(x) 15.6 13.9 11.7

Div Yield (%) 1.2

1.3

1.5

*Consolidated

L&T has emerged as a formidable 'challenger', and is the most integrated player

in the power sector value chain. L&T is a strong play on the recovery in the

investment climate, and hence the recent stock price rally is largely led by

expectations of a decisive election mandate.



We believe that India's capex J-Curve will be kick-started by (1) accelerated

spending on flagship government projects, and (2) government's attempt to

address the contentious issues in several sectors. This phase will then be followed

with revival in industrial cycle culminating with traction in greenfield projects.



Given the dependence on greenfield projects for the next level of growth , we

believe that a large part of L&T's business model depicts characteristics of a

mid to late cycle recovery. Asset monetization is an important near term stock

driver. Maintain

Buy,

with revised SOTP based price target of INR1,186/sh, as

we roll over to FY16E.

TMX

CMP: INR670



TP: INR850

Rating: Buy

Upside:27%

Financials & Valuations (INR b)

Y/E Mar

2014E 2015E 2016E

Net Sales

53.7 58.2 70.0

EBITDA

4.8

5.6

7.0

Adj PAT

3.0

3.5

4.7

EPS (INR)

25.2 29.5 39.4

EPS Gr. (%) (6.6) 17.0 33.3

BV/Sh. (INR) 177.1 197.3 223.8

RoE (%)

15.3 16.1 19.0

RoCE (%)

12.8 14.2 17.2

Payout (%) 32.4 31.7 32.7

Valuations

P/E (X)

26.5 22.7 17.0

P/BV (X)

3.8

3.4

3.0

EV/EBITDA (X) 15.5 13.0 10.2

Div Yield (%) 1.0

1.2

1.6

*Consolidated

9 December 2013

Thermax is a beneficiary of several structural trends, like energy efficiency,

stringent regulations for environment compliance, green products, and

currency depreciation. Overseas revenues contributed 27% of the consolidated

revenues in FY13, and we expect the share to increase to 40% by FY16E.

We understand that TMX is possibly an 'early' stage beneficiary of the possible

uptick in the investment climate, particularly in the heating / WHR segment

(25-28% of consolidated revenues). We expect TMX to report earnings CAGR of

5% over FY13-15, and 33% in FY16E. We maintain

Buy,

with an 18-month price

target of INR850 (20x FY16E at INR762/sh and INR86/sh in subsidiaries).



Capital Goods

Expect 20GW of project awards, interplay of structural factors

When juxtaposed with

aggregate FY13 demand (as

reported by CEA) at

997BUs, the supply CAGR

stands at 8.8%. This

compares with 10 year

electricity consumption

growth of 6.2% CAGR

Statistical analysis of the macro datapoints suggests that new cycle of powergen capex

could possibly commence in next 12-15 months

Installed Coal based Capacity (MW)

- Centre

- State

- Private

Coal Based PLF (%)

- Centre

- State

- Private

Generation (BUs)

- Coal

- Gas

- Hydro

- Nuclear

Demand (BUs)

FY13

130,221

44,055

51,661

34,505

64.5%

74.0%

62.0%

56.0%

907

694

114

997

FY19

220,221

66,769

65,592

89,485

70.6%

80.0%

60.0%

70.0%

1653

1361

111

135

10.5%

11.9%

8.8%

2.9%

5.7%

CAGR

9.2%

7.2%

4.1%

17.2%

1,653

8.8%

Source: CEA, MOSL

67% of the capacity under

construction has 50%+ of

project cost already spent.

This reflects the maturity of

projects, led by hibernation

in awards since mid FY11

Under construction coal capacity (MW), in terms of project cost spent as at Sept 2013

Centre

State

Private

Total

Composition (%)

Under Constr

22,714

13,931

54,980

91,625

0-25%

13,360

4,560

17,920

19.6

25-50%

890

2,100

9,310

12,300

13.4

50%+

8,464

11,831

41,110

61,405

67.0

Source: CEA, MOSL

Of the 25GW projects

awarded by the private

sector from FY10 onwards

to both BHEL and L&T,

already 3.9GW has been

cancelled and another 7GW

are non-moving. Thus, 45%

of the private sector project

awards have been impacted

Announced Project Awards for BHEL & L&T (excl 12.8GW of bulk tender projects), in MW

BHEL

Private

State

Central

L&T

Private

State

Total

Private

State

Central

FY10

14,800

12,910

1,890

4,620

2,640

1,980

19,420

15,550

1,980

1,890

FY11

8,820

4,920

3,900

2,680

11,500

7,600

3,900

FY12

2,520

1,320

1,200

2,520

1,320

1,200

FY13

3,140

2,640

500

1,320

4,460

3,960

500

1HFY14 Cumulative

1,500

30780

19,150

7,740

1,500

3,890

8,620

5,320

3,300

1,500

39,400

24,470

11,040

1,500

3,890

Source: MOSL, Company

9 December 2013

Capital Goods

Imported products witness erosion of competitive dynamics

Capacity under construction: Imports (Chinese and Others)

constitutes 43% of capacity

INR vs CNY: currency movement has been sharp, impacting

competitiveness of imported products

Source: CEA

Source: Bloomberg

Domestic competitive intensity stabilizing

Project award pipeline of

~16-20GW pa could lead to

optimum capacity

utilization

Supercritical installed capacity at ~21-24GW

Boilers

BHEL

L&T - MHI

Thermax – Babcock Wilcox

Doosan

JSW - Toshiba

Bharat Forge - Alstom

Total

12.0

4.0

3.0

2.2

INR B*

8.7

8.2

12.0

4.0

Turbines

INR B*

12.9

21.2

3.0

9.8

5.0

18.0

24.0

*Project Cost; Source: MOSL, Company

Most of the capacities are

operational, while Bharat

Forge – Alstom will be

commissioned by Feb 2015

Large part of domestic capacity already commissioned

Stake

Location

(%)

TG - Haridwar;

100

Boilers - Trichy

51:49 Hazira

51:49 Baroda

100 Chennai

25:75 Chennai

49:51 Gujarat

Commissio

ning

2010

2013

2011

2015

Can ramp-up to 6GW quickly

Ready for commissioning

Expanding to 6GW; construction

commenced FY13

Shifted from Mundra to Sanand;

construction started 2013

Source: MOSL, Company

Remarks

BHEL

L&T - MHI

Thermax - BW

Doosan

JSW - Toshiba

Bharat Forge -

Alstom

9 December 2013

Capital Goods

BTG ordering: Emerging from the ‘Eclipse’

Expect possibility of 20GW project awards in the next 12-15 months

Our statistical analysis of the macro data-points on demand and supply dynamics in

the power sector suggests that the new cycle of powergen capex could commence

over the next 12-15 months. Despite aggressive assumptions on capacity additions

and PLF; the electricity generation CAGR till FY19 when juxtaposed with aggregate

FY13 demand stands at 8.8% and compares with last 10-years electricity

consumption CAGR of 6.2%. Thus, we believe that SEBs will, sooner than later, start

planning about capacity additions. ‘Timing the recovery’ remains the key moving

variable. However we believe that what matters is not ‘timing the project awards’,

but the time when markets believe that project awards ‘could possibly’ commence.

And that time is now.

Statistical analysis suggests a new ‘cycle’ for powergen capex

We believe that the new

cycle of power generation

capex could commence

over the next 12-15 months

Our statistical analysis of the macro data-points on demand and supply dynamics in

the power sector suggests that the new cycle of power generation capex could

commence over the next 12-15 months. Our calculations factor in:



90GW of coal based capacity addition over the next 5 years, and thus we

assume that all projects under construction will be commissioned; note that this

pipeline comprises 60% of capacities by the private sector and some of these

projects face funding and other constraints



PLF improvement for Central sector plants from 74% in FY13 to 80% and for the

private sector from 56% to 70%.

We thus calculate the possible coal based generation growth at 11.9% CAGR till

FY19; and on an aggregate basis at 10.5% CAGR. When juxtaposed with aggregate

FY13 demand (as reported by CEA) at 997BUs, the supply CAGR stands at 8.8%.

The aggregate electricity consumption growth stands at 6.2% CAGR over the last 10

years, and has declined from peak levels of 8.4-8.7% 10-year growth CAGR ending

FY1992-1996. The calculated supply CAGR of 8.8% till FY19 (under fairly aggressive

assumptions of all projects under construction getting commissioned and increased

PLFs on aggregate capacity) needs to be seen in that context. In case we extend the

lull period for new power generation project awards by 2 years, the calculated

supply CAGR declines to 6.4% from 8.8%; which is in line with the last 10-year

average.

Calculated supply CAGR of

8.8% till FY19 compares

with last 10 years electricity

consumption growth of

6.2% CAGR

9 December 2013

Capital Goods

When juxtaposed with

aggregate FY13 demand (as

reported by CEA) at

997BUs, the supply CAGR

stands at 8.8%. This

compares with 10 year

electricity consumption

growth of 6.2% CAGR

Statistical analysis of the macro datapoints suggests that new cycle of powergen capex

could possibly commence in next 12-15 months

Installed Coal based Capacity (MW)

- Centre

- State

- Private

Coal Based PLF (%)

- Centre

- State

- Private

Generation (BUs)

- Coal

- Gas

- Hydro

- Nuclear

Demand (BUs)

FY13

130,221

44,055

51,661

34,505

64.5%

74.0%

62.0%

56.0%

907

694

114

997

FY19

220,221

66,769

65,592

89,485

70.6%

80.0%

60.0%

70.0%

1653

1361

111

135

10.5%

11.9%

8.8%

2.9%

5.7%

CAGR

9.2%

7.2%

4.1%

17.2%

1,653

8.8%

Source: CEA, MOSL

91GW of capacity under construction as at Sept 2013 (GW),

including 55GW from the private sector

Electricity consumption growth stood at 6.2% over the last

10 years (% YoY)

Source: CEA

67% of the capacity under

construction has 50%+ of

project cost already spent,

and is a clear reflection of

the hibernation in awards

since mid FY11

Under construction coal capacity (MW), in terms of project cost spent as at Sept 2013

Centre

State

Private

Total

Under Constr

22,714

13,931

54,980

91,625

0-25%

13,360

4,560

17,920

19.6%

25-50%

890

2,100

9,310

12,300

13.4%

50%+

8,464

11,831

41,110

61,405

67.0%

Source: CEA, MOSL

9 December 2013

Capital Goods

Expect powergen capex to pick up, driven by structural trends

The Indian power sector has witnessed a series of attempts by the government to

address the various contentious issues surrounding SEB finances, fuel availability,

tariff review, etc. While the progress has been encouraging, there is still a lot that

needs to be done.

Distribution companies

having burnt their fingers

once, could look for long-

term tie-ups fairly in

advance



Improved demand planning by distribution companies:

Power generation

capacity addition entails long gestation (of ~50-54 months), and hence projects

awarded over the next 12 -15 months will likely be commissioned in FY18-20.

We believe that State Electricity Boards will commence planning for the long-

term energy procurement well in advance; as over the last cycle, most of the

SEBs incurred a meaningful financial burden by procuring power at higher rates

under short to medium term contracts.



Coal mine allocations, post gap of 5 years:

In July 2013, 14 coal blocks with

reserves of 8b tons were allocated to the power companies (including NTPC,

State Gencos, etc). In Sept 2013, media articles indicated that government will

offer four coal blocks in Orissa with reserves of 2b tons to power companies in

the country's first round of coal mine auction. The blocks will be awarded under

a model similar to the ultra mega power projects where a firm that quotes the

lowest tariff for electricity supply gets to develop a plant based on the mine. The

allocations will be made after a gap of five years, as coal blocks have not been

allotted to private firms after 2008.



Economic and Financial viability of the Distribution business models:

important driver of the power demand in our opinion, will be the economic and

financial viability of the distribution business models; and the longer term trend

is being supported by: i) AT&C losses (as per CEA) have declined from peak

levels of 32.9% in FY01 to 24.2% in FY11 and the target is to reduce the same to

15% with R-APDRP; we understand that of the 1400 towns sanctioned under

Part A, 500 towns have already been integrated with data centers ii) Financial

Restructuring Plan of the SEBs has been approved, with Uttar Pradesh,

Rajasthan, Tamil Nadu and Haryana already completing the exercise; also CCEA

has extended the cut-off date for re-structuring to March 2014 and thus would

enable Bihar, Andhra Pradesh, Karnataka and Jharkhand to also participate in

the same and iii) FY13/FY14 had seen tariff hikes by 24-26 states each year, at

record levels.



Model Bidding Documents, including Case 1 and Case 2 has been approved:

believe that an important driver of the incremental projects will be the ‘Case 2’

Model Bidding Document which was approved in Sept 2013. Post this, bidding

process has been initiated for the two UMPP projects of 4GW each on Design Build

Finance Operate and Transfer (DBFOT) basis and 1.3GW in Jharkhand. The UMPPs

are in Orissa (pit head) and Cheyyur (imported coal), and we understand that the

target is to award these projects by end FY14. Approval of Case 1 document also

entails that IPPs will now be able to tie-up capacities under construction on a long

term PPA route; which was also the key requirement for coal allocation by Coal

India.

9 December 2013

Capital Goods



SEBs financials were impacted as they procured power at

higher costs through medium term contracts (INR/kwh)

Coal PLFs have declined meaningfully given the fuel

shortages and poor SEB financials impacting demand (%)

Source: CERC

Source: CEA

In July 2013, 14 coal blocks

with reserves of 8b tons

were allocated to the

power companies (including

NTPC, State Gencos, etc)



Coal mine allocations of 8b tons for power projects in July 2013

Allottee

Orissa Thermal Power

NTPC

J&K State Power Dev

Chhattisgarh State Power Dev

Neyveli UP Power

Chhattisgarh State Power Dev

Andhra Pradesh Power Gen

Rajasthan Vidyut Utpadan

Maharashtra State Power Gen

Gujarat State Electricity

MP Power Gen

Karnataka Power Corp

WB Power

Bihar State Power

Punjab State Power

TANGEDCO

UP Rajya Vidyut

Haryana Power

UP Rajya Vidyut

m tons

1234

550

629

550

266

130

150

279

396

150

701

200

170

532

382

584

486

229

171

250

8,311

Source: MOSL, Media Articles

Captive Block

Tentuloi, Orissa

Bhalumuda, Chhattisgarh

Banai, Chhattisgarh

Chandrabila, Orissa

Kudanali-Luburi, Orissa

Baisi, Chhattisgarh

Pachwara South, Jharkhand

Jilga-Barpali, Chhattisgarh

Sarapal-Nuapara, Orissa

Kente Extension, Chhattisgarh

Mahajanvadi, Maharashtra

Gondbahera Ujheni, MP

Deocha-Pachami, WB

Kalyyanpur- Badalpara, Jharkhand

Total

9 December 2013

Capital Goods

Pace of reduction could

accelerate as we

understand that of the 1400

towns sanctioned under

Part A, 500 towns have

already been integrated

with data centers and

target is to reduce losses

to 15%



AT&C losses have declined from peak levels (%)

Source: CEA, MOSL

BTG award pipeline showing initial signs of recovery

Possible project awards of

20GW in next 12-15 months

will be an important driver,

given that industry capacity

for super-critical boilers and

turbines stand at

~21-24GW pa



During FY12 and FY13, the power BTG project awards stood at just ~20GW,

including 13GW of capacities being awarded under the bulk tender route. This

compares with an annual order award run-rate of ~25-30GW pa during FY07-

FY10. Going forward, we believe that the pipeline is again showing initial signs of

recovery with projects of ~20GW likely to be awarded in the next 12-15 months.

This could be an important turning point, particularly for the equipment

manufacturers, given that industry capacity for super-critical boilers and

turbines stands at ~21-24GW pa.

An important driver of the incremental projects has been the ‘Case 2’ Standard

Bidding Document which was approved in Sept 2013. Post this, bidding process

has been initiated for the two UMPP projects of 4GW each on Design Build

Finance Operate and Transfer (DBFOT) basis and 1.3GW in Jharkhand. The

UMPPs are in Orissa (pit head) and Cheyyur (imported coal), and we understand

that the target is to award these projects by end FY14.

We expect NTPC to award ~5GW of projects, including 2GW of North Karanpura

which had been cleared by the Cabinet Committee on Investments in February

2013 and the bidders are L&T, BHEL and Doosan; 1.3GW of Tanda (where L&T is

already L1 in boilers, while TG bids have been invited) and 1.6GW of retendering

for Darlipalli post exit of BGR (BHEL is L1 for supply of boilers).

In addition, we expect project awards of ~5-7GW by state sector, including

1.3GW by Mahagenco, 1.3GW for Malwa project in Madhya Pradesh (L&T is

already L1), 800MW Wanakbori in Gujarat, 2.4GW by AP Genco, etc. We also

expect an increasing trend of several state governments to invite bids on Case 2

basis, going forward. Other key projects include 1980MW by Neyveli Lignite for

the Ghatampur project, with the BOP tender also been invited in Oct 2013.

In addition, we expect possibilities of project awards by Jindal Power for the

1.3GW Kineta Power / Dumka, etc; but a revival in the private IPP interest still

seems a long way ahead.

9 December 2013

Capital Goods

Four years of constrained

ordering environment for

BHEL:

i) FY12/FY13 - Limited

gross project awards of

INR198b / INR256b, and

largely driven by NTPC bulk

tender

ii)

FY10/FY11:

Sizeable part of awards at

89%/51% respectively from

private sector, with several

of these projects facing

execution challenges

BHEL: Power sector order intake has been impacted by constrained demand environment

Source: MOSL, Company; Note: FY12 numbers are net of order cancellations

Of the 25GW projects

awarded by the private

sector from FY10 onwards

to both BHEL and L&T,

already 3.9GW has been

cancelled and another 7GW

are non-moving. Thus, 45%

of the private sector project

awards have been impacted

Announced Project Awards for BHEL & L&T (excl 12.8GW of bulk tender projects), in MW

BHEL

Private

State

Central

L&T

Private

State

Total

Private

State

Central

FY10

14,800

12,910

1,890

4,620

2,640

1,980

19,420

15,550

1,980

1,890

FY11

8,820

4,920

3,900

2,680

11,500

7,600

3,900

FY12

2,520

1,320

1,200

2,520

1,320

1,200

FY13

3,140

2,640

500

1,320

4,460

3,960

500

1HFY14 Cumulative

1,500

30,780

19,150

7,740

1,500

3,890

8,620

5,320

3,300

1,500

39,400

24,470

11,040

1,500

3,890

Source: MOSL, Company

Bids for ~9.3GW of Case 2 projects have already been invited

Post the approval of the

Case 2 bid document in

Sept 2013, bidding process

for ~9.3GW of capacity has

already been initiated

An important driver of the incremental projects has been the ‘Case 2’ Standard

Bidding Document which was approved in Sept 2013. Post this, bidding process has

been initiated for the two UMPP projects of 4GW each on Design Build Finance

Operate and Transfer (DBFOT) basis and 1.3GW in Jharkhand. The UMPPs are in

Orissa (pit head) and Cheyyur (imported coal), and we understand that the target is

to award these projects by end FY14.



For the

Orissa UMPP,

the Request for Qualification has seen interest from nine

players: NHPC (teamed up with Bhel and Singareni Colleries), NTPC, Tata Power,

Adani Power, JSW Energy, Jindal Power, Sterlite Infraventures, China Light &

Power and L&T. Land for the project is expected to be in possession shortly,

water is available from Hirakud reservoir and coal supply is assured through

allocated coal blocks; thus we understand that the project will have limited

execution and operational risks.



For the

Cheyyur UMPP,

there have been issues with local fishermen protesting

environmental clearances, and National Green Tribunal had restricted Power

Finance Corporation to go ahead with the award process; and thus the speedy

resolution of the matter will be closely watched. Again, the Request for

Qualification has seen interest from eight players: NTPC, Adani Power, JSW

Energy, Jindal Power, Sterlite Infraventures, China Light & Power, GMR Energy

and L&T. Recent PFC release stated that the Environment clearance, forest

9 December 2013

Capital Goods



clearance and water linkage for the project is already in-place; and land is

expected to be in possession shortly.

Jharkhand SEB

invited bids for pre-qualification of developer for setting up 1320

MW Patratu power plant on DFBOT basis. Coal for the proposed project is to be

supplied from Banhardih captive coal block. Jharakhad SEB intends to set up

three power plants with an aggregate capacity of 3.6GW, and Patratu is

amongst the first tenders being invited; other projects are expected to be set up

in Godda and Chatra with coal to be provided from Urma - Paharitha and

Maurya coal blocks.

9 December 2013

Capital Goods

Disciplined Competitive ‘Aggression’

BHEL has the highest operating leverage

From a market structure that was threatened by: i) intense competition from

Chinese, Koreans and Japanese companies ii) and, possibility of ~5-6 players in the

domestic market, BTG sector is undergoing a metamorphosis. Imported products

have witnessed erosion of competitiveness, while the domestic players are engaging

in disciplined ‘aggression’. Business models from state gencos around vendor

financing have witnessed muted bidding interest and unviable bids; and thus its

again back to basics.

Possible project awards of

20GW in next 12-15 months

will be an important driver,

given that industry capacity

for super-critical boilers

and turbines stand at

~21-24GW pa

From a market structure that was threatened by: i) intense competition from

Chinese, Koreans and Japanese companies ii) and, possibility of ~5-6 players in the

domestic market, the BTG manufacturing sector is undergoing a metamorphosis.



Imported products witness erosion of competitive intensity:

Of the 90GW

capacity under construction as per CEA, share of Chinese and other imported

equipments stand at 36.8% and 6.3% respectively. This is a large market pie

being captured by imported products. Going forward, we believe the

competitive intensity of such players has been largely eroded given i) currency

movements (sharp 56% currency depreciation over the last 3 years), ii)

imposition of 21% import duty in 2012 leading to differential of ~14% for

domestic players and iii) also intense competition given commissioning of ~21-

24GW of supercritical BTG manufacturing capacities in India has led to a 15%

price correction in boilers and 20% in turbines under bulk tender 2 vs bulk

tender 1.



Disciplined competitive aggression amongst domestic players:

The domestic

market structure is also showing resemblance of stability, with ~4 players each

in boilers and turbines setting up manufacturing capacities of ~21-24GW pa for

supercritical projects. Based on interactions with industry players, we

understand that there has been limited progress in setting up integrated

manufacturing capacities for supercritical projects by few players like BGR-

Hitachi, GB Engineering - Ansaldo, ISGEC - Foster Wheeler, Cethar - Riley, etc.

Recently in October 2013, the EPC bid for 600MW Surat Lignite project awarded

to Lanco Infra (INR33b) was cancelled as the company did not submit 10% bank

guarantee.

9 December 2013

Capital Goods

Imported products witness erosion of competitive dynamics

Capacity under construction: Imports (Chinese and Others)

constitutes 43% of capacity

INR vs CNY: currency movement has been sharp, impacting

competitiveness of imported products

Source: CEA

Source: Bloomberg

Our calculation suggests a

net gain of approx 14% for

domestic manufacturers

Imposition of 21% import duty in 2012 leading to differential of ~14% for domestic players

Duty

Domestic

Imports

Value

RM Costs

Customs (%)

Excise (Adj for Cenvat)

Sales Tax, etc

Duty Impact

35%

Earlier

BHEL

650

350

1,000

325

107

12%

Chinese

1,000

Duty

35%

Wef 2012

BHEL

650

350

1,000

325

120

183

-3.4%

Source: MOSL, Company

120

217

Chinese

1,000

12%

Net Impact

10.7%

Net Gain (for domestic mfgrs)

14.1%

Note: Calculations based on theoretical product value of 1,000

Domestic competitive intensity stabilizing

Supercritical installed capacity at ~21-24GW

Boilers

BHEL

L&T - MHI

Thermax – Babcock Wilcox

Doosan

JSW - Toshiba

Bharat Forge - Alstom

Total

12.0

4.0

3.0

2.2

INR B*

8.7

8.2

12.0

4.0

Turbines

INR B*

12.9

Project award pipeline of

~16-20GW pa could lead to

optimum capacity

utilization

21.2

3.0

9.8

5.0

18.0

24.0

*Project Cost; Source: MOSL, Company

9 December 2013

Capital Goods

Most of the capacities are

operational, while Bharat

Forge – Alstom will be

commissioned by Feb 2015

Large part of domestic capacity already commissioned

Stake

(%)

BHEL

L&T - MHI

Thermax - BW

Doosan

JSW - Toshiba

Bharat Forge -

Alstom

100

51:49

100

25:75

49:51

Location

TG - Haridwar;

Boilers - Trichy

Hazira

Baroda

Chennai

Gujarat

Commissio

ning

2010

2013

2011

2015

Can ramp-up to 6GW quickly

Ready for commissioning

Expanding to 6GW; construction

commenced FY13

Shifted from Mundra to Sanand;

construction started 2013

Source: MOSL, Company

Remarks

Business models around vendor financing witness muted bidding interest,

and unviable bids

Another encouraging trend is that new business models being contemplated like

vendor financing, etc have witnessed poor response given the stringent funding

conditions. Our channel checks indicate that for the TANGECO project, the sole

bidder quoted a price that was at 35-50% premium to the contracts which do not

entail financing pre-conditions.



In early 2012, Mahagenco had invited expressions of interest for coal-based

power projects at Dondaicha (3.3GW) and Dhopawe (1.98GW).



TANGEDCO in 2013 come out with tenders for Udangudi (1.32GW) project

which also entailed suppliers credit under “EPC cum Debt Financing Contract”.

The contract terms entailed funding atleast 75% of the EPC cost and 100% of the

Interest during Construction period. The bidding condition was flexible towards

project imports and stipulated that i) Bidder shall be an Indian manufacturer

who has designed, engineered, manufactured, supplied, erected, commissioned

at least one number 500 MW or above which is in successful operation for at

least one year OR ii) Bidder shall be a manufacturer who has designed,

engineered, manufactured, supplied, erected, commissioned at least one unit of

minimum 660 MW capacity which is in successful operation for at least one year

as on date of techno commercial bid opening. Indian JV company can also

participate based on the experience of the parent company.

For private capacities, overseas orders have also started trickling-in

We understand that there have been few international orders received by the new

manufacturing capacities of L&T-Mitsubishi and JSW-Toshiba. While the quantum is

not meaningful initially, we believe that the opportunities exist to scale up the

export business over the next few years. Currency depreciation has also made

Indian manufacturing more competitive.



In its Press Release in 2013,

JSW-Toshiba

had stated that “Going forward, in

addition to India, Toshiba Group, will look to reinforce its presence by making

the best use of Toshiba JSW in markets around the world including Asia and the

Middle East, where demand for thermal power plants is strong”.



L&T

in its FY13 Annual Report had also stated that “The Joint Ventures with

Mitsubishi Heavy Industries for manufacture of Steam Turbines and Steam

Generators are seeking to supply components to MHI’s third country projects.”

It also stated that “The export market thrust which is an integral part of the

9 December 2013

Capital Goods



company’s business strategy got impetus as the company bagged a prestigious

order from MHI to supply pressure parts for Rabigh Arabian Water Electricity

Company, Saudi Arabia.”

For

TMX,

there are options of bagging orders from the overseas markets, as part

of the global manufacturing network of Babcock and Wilcox. The TBW

manufacturing plant is the only second plant globally (apart from China), and

being a modern plant combined with the sharp currency depreciation, we

believe that competitiveness for the Indian manufacturing has comparatively

improved.

Despite a constrained

environment, L&T has

managed to achieve EBIDTA

breakeven with sub 50%

capacity utilization

L&T reported strong EBIDTA improvement despite revenue decline in FY13; comparison

with BHEL (INR M)

BHEL

FY12

FY13

Capacity (MW)

20,000 20,000

Revenues

479,788 484,246

RM cost

283,440 273,155

% of sales

59%

56%

Other manufacturing cost 42,618 59,666

% of sales

12%

Staff cost

54,654 57,528

% of sales

11%

12%

Total Expenses

380,712 390,348

EBITDA

99,076 93,898

% of sales

21%

19%

LT Turbine

FY12

FY13

12,323

10,630

86%

898

400

11,927

396

LT Boiler

FY12

FY13

LT BTG

FY12

FY13

4,000 4,000

36,801 33,713

30,698 25,807

83%

77%

3,706 3,965

10%

12%

1,356 1,362

35,760 31,133

1,042 2,581

9,923 24,478 23,790

7,397 20,068 18,410

75%

82%

77%

1,760 2,808 2,205

18%

15%

11%

439

956

923

9,596 23,832 21,537

328

646 2,253

Source: MOSL, Company

BHEL best positioned, as cyclical factors support recovery

We believe that BHEL is the most actionable play on the theme of a possible

recovery in power generation project awards.



BHEL

is strongly exposed to cyclical factors: i) Contribution margins at ~40-41%

vs expected EBIDTA margin of 11.9% in FY14, leading to a meaningful operating

leverage ii) Core NWC stable at ~200 days; cyclical factors of Retention money

(at ~200 days in FY14E vs 55-60 days in FY07-09) and customer advances

(deteriorated from 63% of revenues in FY09 to 34% in FY13) that impacted

reported NWC are expected to normalize, as we expect BTB to increase from

2.2x currently to 3x in FY15/16E.

We expect Free Cash Flows to improve from ~INR16-19b in FY13/14E to ~INR75-

88b in FY15/16E, leading to a meaningful increase in net cash from INR63b in

FY13 to INR174b in FY16E (~43% of current market cap). We upgrade the stock

Buy

with a Price target of INR210/sh (14x FY16E).



L&T

has emerged as a formidable 'challenger', and is the most integrated player

in the power sector value chain. L&T is a strong play on the recovery in the

investment climate, and hence the recent stock price rally is largely led by

expectations of a decisive election mandate.

We believe that India's capex J-Curve will be kick-started by (1) accelerated

spending on flagship projects, and (2) government's attempt to address the

9 December 2013

Capital Goods

contentious issues in several sectors. This phase will then be followed with

revival in industrial cycle culminating with traction in greenfield projects.

Given the dependence on greenfield projects for the next level of growth , we

believe that a large part of L&T's business model depicts characteristics of a mid

to late cycle recovery. Asset monetization is an important near term stock

driver. Maintain

Buy,

with revised SOTP based price target of INR1,186/sh, as

we roll over to FY16E.



Thermax

is a beneficiary of several structural trends, like energy efficiency,

stringent regulations for environment compliance, green products, and currency

depreciation. Overseas revenues contributed 27% of the consolidated revenues

in FY13, and we expect the share to increase to 40% by FY16E.

We understand that TMX is possibly an 'early' stage beneficiary of the possible

uptick in the investment climate, particularly in the heating / WHR segment (25-

28% of consolidated revenues). We expect TMX to report earnings CAGR of 5%

over FY13-15, and 33% in FY16E. We maintain

Buy,

with an 18-month price

target of INR850 (20x FY16E at INR762/sh and INR86/sh in subsidiaries).

BHEL P/E band

L&T P/E band

Source: Bloomberg, MOSL

Thermax P/E band

1 Year Relative Performance to Sensex

Source: Bloomberg, MOSL

9 December 2013

9 December 2013

Update | Sector: Capital Goods

BHEL

BSE Sensex

20,958

S&P CNX

6,241

CMP: INR171

TP: INR210

Buy

Stock Info

Bloomberg

Equity Shares (m)

52-Week Range (INR)

1, 6, 12 Rel. Per (%)

M.Cap. (INR b)

M.Cap. (USD b)

Cyclical factors support recovery

BHEL IN

2,447.6

248/100

20/-18/-36

418.5

6.8

Strong operating leverage and improvement in FCF to drive re-rating

Expect BTB to bounce back from 2.2x currently to ~3x in FY15/16E



Financial Snapshot (INR b)

Y/E Mar

2014E 2015E 2016E

Net Sales

395.6 325.8 358.8

EBITDA

Adj PAT

EPS (INR)

EPS Gr. (%)

RoE (%)

RoCE (%)

Payout (%)

Valuations

P/E (x)

P/BV (x)

EV/EBITDA

( )

Div Yield (%)

* Consolidated

11.9

1.3

7.5

2.4

17.8

1.2

9.0

1.7

11.4

1.1

5.1

2.6

47.2

35.1

14.4

33.7

23.6

9.6

47.6

36.7

15.0

55.6

10.4

10.7

30.0



Based on our expectations that the new cycle for powergen capex will

possibly commence in the next 12-15 months, we expect BHEL’s power

segment order intake to improve from average levels of INR196b in FY12-

14E to average of INR280b in FY15/16E. Since FY10, BHEL’s BTB has nearly

halved from peak levels of 4.3x to 2.2x in FY13/1HFY14; and we expect the

ratio to improve to 2.6x in end FY14 and further to ~3x in FY15/16E.

Improvement in BTB is an all important trend for capital goods companies,

and has linkages with several components including working capital,

operating free cash flows and operating leverage.

(46.4) (32.9)

11.1

11.4

30.0

7.1

7.3

30.0

Expect margins to bottom in FY15, meaningful operating leverage

We expect BHEL’s EBIDTA margins to decline from 19.4% in FY13 to 10.3% in

FY15E, and improve to 13.3% in FY16E. During this period, we expect

contribution margins to be maintained at 40-41%, and thus the expectations of

margin expansion in FY16E are largely a function of the operating leverage,

particularly staff costs (17% in FY16E, vs 18.8% in FY15E) and provisions,

including LDs (at 3.6% in FY16E vs 7.1% in FY14E).

BV/Sh. (INR) 133.3 139.6 149.3

Operating cash flows to improve; Core NWC stable



Shareholding pattern (%)

Promoter

Dom. Inst

Foreign

Others

Sep-13 Jun-13 Sep-12

67.7

12.0

12.2

12.7

15.5

15.2

14.6

4.8

5.0



Stock Performance (1-year)

For BHEL, a large part of the variation in the reported net working capital is

being driven by cyclical factors, such as retention money (at ~200 days in

FY14E vs 55-60 days in FY07-09) and customer advances (deteriorated from

63% of revenues in FY09 to 34% in FY13, but stable as % of order book at

12-14%). Thus, while the core net working capital has been fairly stable at

~200days, the reported number has been volatile from negative 24 days in

FY09 to 188 days in FY14E.

Given that we expect the above cyclical factors impacting NWC to normalize

in FY15/16E, we expect Free Cash Flows to improve from ~INR16-19b in

FY13/14E to ~INR75-88b in FY15/16E. This will lead to a meaningful increase

in net cash from INR63b in FY13 to INR174b in FY16E (~43% of current

market cap).

Valuations, upgrade to Buy

We roll over our price target to FY16, and assign a PER multiple of 14x based on

long term averages. We upgrade the stock to

Buy,

with a Price target of INR210,

upside of 23%. The key variable to watch out for is the impact of the Pay

Commission in FY17, and could be an important swing factor. The key risk to our

view is a delay in pick-up in power gen ordering cycle and also possibility of

write-off of a large part of the retention money (~INR220b currently).

9 December 2013

BHEL

Expect BTB to bounce back from lows of 2.2x currently to ~3x in FY15/16E



For BHEL, BTB has nearly halved from peak levels of 4.3x in FY10 to 2.2x in

FY13/1HFY14. We expect the ratio to improve marginally to 2.6x in end FY14

and further to ~3x in FY15/16E. This is being led by increased order intake,

particularly in the power segment, from average levels of INR196b in FY12-14E

to average of INR280b in FY15/16E.

During the 2QFY14 post results concall, the management had also stated that

15GW of projects are likely to be finalized in 2HFY14, and BHEL is favorably

positioned for ~5GW of projects. Going forward, we expect that the new cycle of

powergen capex could possibly commence in the next 12-15 months and the

pipeline is again showing initial signs of recovery.

Improvement in BTB is an all important trend for companies in the capital goods

sector, and has linkages on several components including working capital,

operating free cash flows and operating leverage.

Expect BTB to inch-upwards to ~3x in FY15/FY16E

BTB has declined to 2.2x, at all time lows

Source: MOSL, Company

Expect Power sector orders to bounce back from average levels of INR196b in FY12-14E to

average of INR280b in FY15/16E

Power

Industry

472

135

420

International

104

464

140

256

192

301

261

277

411

136

135

109

Source: MOSL, Company

Expect margins to bottom in FY15, BHEL has meaningful operating leverage



Given our expectations of BTB bottoming in 1HFY14, we expect reported EBIDTA

margins to bottom in FY15, given the time lag of ~18 months. We expect BHEL’s

EBIDTA margins to decline from 19.4% in FY13 to 10.3% in FY15E, and improve

to 13.3% in FY16E. During this period, we expect contribution margins to be

maintained at 40-41%, and thus the expectations of margin expansion are

9 December 2013

BHEL



largely a function of the cyclical factors: staff costs and provisions (plus

liquidated damages).

Staff cost for BHEL is largely fixed in nature and thus entails a very strong

operating leverage: during FY01-FY12, staff cost declined meaningfully from

23.9% of revenues to 11.4% of revenues; and given the poor operating leverage,

we expect the same to increase to 18.8% of revenues in FY15E. Provisions also

have a cyclical character, and are a function of the execution stage of the

projects. Given the meaningful cost and time overruns in terms of project

execution over the last 2-3 years, the quantum is expected to increase

meaningfully in FY14 and we expect the trends to normalize going forward.

Contribution margins has been maintained at ~40-41%

despite intense competitive pressures

Expect EBIDTA margins to bottom in FY15E, improvement is

a function of operating leverage led by cyclical factors

Source: MOSL, Company

Expect Staff cost at 18.8% of revenues in FY15, completing a

full circle

Net additions to provisions, plus Liquidated damages are

also highly cyclical in nature

Source: MOSL, Company

Operating cash flows to improve; Core NWC stable



For BHEL, a large part of the variation in the reported net working capital is

being driven by cyclical factors, like retention money and customer advances.

Thus, while the core net working capital has been fairly stable at ~200days, the

reported number has been volatile from negative 24 days in FY09 to 188 days in

FY14E.

Retention money is largely a function of negotiations with the customers and

the schedule of project completions; the quantum has increased meaningfully

from 55-60 days in FY07-09 to ~200 days in FY14. Improving collections has been

an important area of focus and the intense efforts had led to 15% higher

9 December 2013

BHEL



collections in FY13. Media reports had indicated that BHEL is also taking legal

steps to recover the dues. Also, BHEL is taking direct line of credit from bankers

/ financial institutions and hence will get a priority in terms of payments for

equipment supplies. Customer advances is a function of the order intake and

order book, and has been fairly stable at ~12-14%; however as a % of revenues

the number has been volatile from 63% in FY09 to 34% in FY13.

Given that we expect the cyclical factors (retention money and customer

advances) impacting Net Working Capital to normalize in FY15/16E, we expect

Free Cash Flows to improve from ~INR16-19b in FY13/14E to ~INR75-88b in

FY15/16E. This will lead to a meaningful increase in net cash from INR63b in

FY13 to INR174b in FY16E.

Customer advances have remained stable (as % of order

book), but volatile as % of revenues

Retention money is largely a function of negotiation with

the customers, and expect the quantum to decline (INR b)

Source: MOSL, Company

NWC volatility a function of cyclical factors; expect a meaningful improvement in FY16E (Days)

Debtors (excl Retention Money)

Inventories

Loans and Advances

Sundry Creditors

Other Liabilities

Core NWC

Volatility led by Cyclical Factors

Retention Money

Customer Advances

Provisions

Reported NWC

FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14E FY15E FY16E

220 190 185 211 164 148 173 164 155 163 172 177 177 198 177

107 105

96 112 102

89 108 109 103 100 105

95 102 110

264 232 234 273 208 174 206 211 190 200 207 195 200 232 220

101

158

125

143

176

150

165

215

(12)

229

(24)

213

187

104

154

129 213 211 145

124 133 146 132

91 112 106

131 188 184 127

Source: MOSL, Company

9 December 2013

BHEL

Given the correction in cyclical factors impacting NWC,

expect FCF to improve in FY15/16E (INR b)

Improved FCF to entail meaningfully improved cash levels,

expect FY16E net cash

at 43%

of market cap (INR b)

Source: MOSL, Company

Valuations, Upgrade to Buy

We expect BHEL to report EPS of INR14.4 in FY14/INR9.6 in FY15E / INR15 in FY16E.

At the CMP of INR171/sh, the stock quotes at PER of 119x FY14E / 17.8x FY15 / 11.4x

FY16E. We roll over our price target to FY16, and assign a PER multiple of 14x based

on long term averages. We upgrade the stock to

Buy,

with a price target of INR210,

upside of 23%.

BHEL is making efforts in terms of expanding the contribution from the industry

business, particularly transmission and transportation, and they provide interesting

long term business drivers. The key variable to watch out for is the impact of the Pay

Commission in FY17, and could be an important swing factor. However, we believe

that a part of the impact will be mitigated by productivity improvements over the

medium term, and thus the impact is possibly not structural. We would be watchful

of the trends.

9 December 2013

BHEL

BHEL: Operating Matrix

FY06

Order Intake (INR b)

Power

R&M

Industry

International

Cancellations

Total Order Intake

Order intake Growth (% YoY)

Power

Industry

International

Order backlog (INR b)

Power

Industry

International

Total Order backlog

Growth (%)

Segmental Revenues (INR b)

Power

Industry

International

Total Revenues

Revenue Growth (% YoY)

Power

Industry

International

Total

EBITDA Margins (%)

Employees (in 000)

Staff Cost (INR B)

INR 000/empl

Net Working Capital (Days)

Reported (excl Cash)

Customer Advances

NWC (excl Customer Adv)

189

(19)

425

280

375

3.9

FY07

245

356

155

(43)

376

550

88.2

FY08

387

503

710

852

41.1

FY09

444

597

974

130

1,170

18.7

FY10

401

135

590

(11)

1,125

208

1,424

(1.1)

FY11

443

114

605

(15)

1,258

232

117

1,641

2.5

FY12

176

221

(57)

(31)

(94)

1,077

175

1,347

(63.5)

FY13

227

317

(48)

756

933

115

104

1,152

43.2

FY14E

162

264

(25)

792

123

1,012

(16.6)

FY15E

264

382

822

142

1,063

44.7

FY16E

217

359

(13)

789

108

161

1,058

(5.9)

145

50.5

21.9

29.9

40.5

18.9

42.6

18.8

441

127

187

29.5

34.9

3.2

29.0

20.4

42.6

23.7

559

159

214

25.5

(12.7)

5.7

14.2

18.9

42.1

26.1

608

213

280

34.1

27.8

4.8

31.0

15.7

43.6

41.9

939

269

342

25.8

3.0

32.0

21.8

17.7

45.7

65.4

1,423

348

450

29.5

56.3

(22.2)

31.6

19.9

46.3

54.0

1,160

379

102

495

8.8

13.5

21.7

10.1

20.3

46.7

54.7

1,137

396

100

502

4.5

(1.6)

(60.8)

1.3

19.4

49.4

57.5

1,177

333

404

(15.8)

(35.0)

(19.5)

12.4

48.4

61.3

1,247

270

331

(18.9)

(15.0)

(18.0)

10.3

49.9

61.2

1,247

295

365

9.1

15.0

10.0

10.1

13.3

48.4

60.9

1,285

150

202

165

189

-4

215

212

-19

229

210

213

228

187

222

154

253

133

124

257

190

133

324

186

146

333

129

132

261

Source: Company, MOSL

9 December 2013

BHEL

Financials and valuation

Income statement

Y/E March

Total Income

Change (%)

Staff Cost

Mfg. Expenses

Selling Expenses

EBITDA

Change (%)

% of Net Sales

Depreciation

Interest

Other Income

Extra-ord. Items (net)

PBT

Tax

Rate (%)

Reported PAT

Adjusted PAT

Change (%)

2011

404,443

21.0

54,769

230,816

38,325

80,532

36.0

19.9

5,441

547

10,206

5,305

90,055

29,945

33.3

60,110

56,650

20.9

2012

479,788

18.8

54,654

280,845

45,213

99,076

23.0

20.6

8,000

513

12,656

-193

103,026

32,623

31.7

70,403

68,922

21.7

2013

484,247

0.8

57,528

280,156

52,665

93,898

-5.2

19.4

9,534

1,253

11,217

-4

94,324

28,177

29.9

66,148

65,540

-4.9

2014E

395,587

-18.6

61,267

226,819

60,285

47,216

-49.7

11.9

9,516

1,206

13,565

50,058

16,269

32.5

33,789

35,129

-46.4

(INR Million)

2015E

325,823

-18.0

61,240

186,880

43,997

33,706

-28.6

10.3

10,664

1,155

12,254

34,141

10,584

31.0

23,557

-32.9

2016E

358,824

10.1

60,874

206,512

43,868

47,570

41.1

13.3

11,908

1,245

17,953

52,370

15,711

30.0

36,659

55.6

Balance sheet

Y/E March

Share Capital

Reserves

Net Worth

Loans

Differed Tax Liability

Capital Employed

Gross Fixed Assets

Less: Depreciation

Net Fixed Assets

Capital WIP

Investments

Curr. Assets

Inventory

Debtors

Cash & Bank Balance

Loans & Advances

Other Current Assets

Curr. Liab. & Prov.

Creditors

Other Liabilities

Provisions

Net Current Assets

E: MOSL Estimates

2011

4,895

196,643

201,538

1,021

-21,636

180,924

80,497

46,488

34,009

17,338

4,392

515,229

108,521

274,656

96,302

32,654

3,096

390,043

80,526

224,790

84,728

125,186

2012

4,895

248,837

253,732

1,234

-15,462

239,504

97,066

54,098

42,968

13,476

4,617

591,237

135,487

357,405

66,720

30,118

1,506

412,794

108,717

211,999

92,078

178,443

2013

4,895

299,546

304,441

14,152

-15,507

303,086

107,832

63,248

44,585

11,716

4,292

625,185

117,638

398,882

77,321

29,344

2,000

382,692

104,313

180,916

97,462

242,493

2014E

4,895

321,475

326,370

14,094

-15,507

324,958

117,634

72,005

45,630

5,000

4,292

614,786

100,808

414,470

72,946

24,562

2,000

344,750

84,643

158,150

101,956

270,036

(INR Million)

2015E

4,895

336,764

341,659

14,094

-15,507

340,246

129,424

82,669

46,755

5,000

4,292

594,222

88,990

356,072

125,394

21,766

2,000

310,023

67,311

141,396

101,315

284,199

2016E

4,895

360,555

365,451

14,094

-15,507

364,038

143,214

94,577

48,638

5,000

4,292

626,907

105,006

308,949

187,898

23,054

2,000

320,799

74,303

139,648

106,848

306,109

9 December 2013

BHEL

Financials and valuation

Ratios

Y/E March

Basic (INR)

EPS

Change (%)

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 (%)

Return Ratio (%)

RoE

RoCE

Turnover Ratios

Debtors (Days)

Inventory (Days)

Creditors. (Days)

Asset Turnover (x)

Leverage Ratio

Debt/Equity (x)

2011

23.1

20.9

25.4

82.3

6.2

25.4

2012

28.2

21.7

31.4

103.7

6.4

22.3

2013

26.8

-4.9

30.7

124.4

5.4

20.0

6.4

5.6

3.7

0.7

1.4

3.2

31.4

35.0

241

100

11.7

-0.6

30.3

33.0

263

105

11.0

-0.5

23.5

24.5

290

10.7

-0.3

2014E

14.4

-46.4

18.2

133.3

4.1

30.0

11.9

9.4

7.5

0.9

1.3

2.4

11.1

11.4

375

8.5

-0.2

2015E

9.6

-32.9

14.0

139.6

2.9

30.0

17.8

12.2

9.0

1.0

1.2

1.7

7.1

7.3

393

102

6.8

-0.2

2016E

15.0

55.6

19.8

149.3

4.5

30.0

11.4

8.6

5.1

0.7

1.1

2.6

10.4

10.7

309

110

7.2

-0.3

Cash flow statement

Y/E March

PBT bef. EO Items

Add : Depreciation

Interest

Less : Direct taxes paid

(Inc)/Dec in WC

CF from Operations

EO Income

CF from Op. Incl. EO Items

(Inc)/dec in FA

(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

2011

84,750

5,441

547

29,945

-36,596

36,198

5,305

41,503

-17,339

-3,593

-20,932

-6,369

-256

547

14,999

-22,171

-1,599

97,901

96,301

2012

103,218

8,000

513

32,623

-85,648

-11,245

-193

-11,438

-13,097

-225

-13,322

6,169

213

513

11,302

-5,434

-30,194

96,302

66,720

2013

94,329

9,534

1,253

28,177

-8,217

31,113

-4

31,108

-9,390

325

-9,065

-43

12,918

1,253

23,064

-11,442

10,601

66,720

77,321

2014E

50,058

9,516

1,206

16,269

-8,409

15,567

-3,846

-58

1,206

14,833

-16,097

-4,376

77,321

72,945

(INR Million)

2015E

34,141

10,664

1,155

10,584

53,947

75,196

-11,790

1,155

9,803

-10,958

52,448

72,946

125,394

2016E

52,370

11,908

1,245

15,711

39,245

88,441

-13,790

1,245

10,902

-12,147

62,504

125,394

187,898

9 December 2013

9 December 2013

Update | Sector: Capital Goods

Larsen & Toubro

BSE Sensex

20,958

S&P CNX

6,241

CMP: INR1,087

TP: INR1,186

Buy

Stock Info

Bloomberg

Equity Shares (m)

52-Week Range (INR)

1, 6, 12 Rel. Per (%)

M.Cap. (INR b)

M.Cap. (USD b)

Integrated player in power segment value chain

LT IN

926.1

1,133/678

12/8/-10

1,006.3

16.3

Maintain Buy, but risk-reward increasingly skewed

Integrated player in power value chain

L&T Power offers turnkey solutions for up to 1GW super critical coal-based

power plants, and has also demonstrated capability of executing BOP packages

for both subcritical and supercritical thermal projects on EPC basis. We believe

that integration in the value chain is the key competitive advantage; also given

the increasing trend of a large number of projects being awarded on EPC basis.

Financial Snapshot (INR Billion)

Y/E Mar

2014E 2015E 2016E

Sales

EBITDA

Adj PAT *

EPS (INR)*

EPS Gr. (%)

BV/Sh (INR)

RoE (%)

RoCE (%)

Payout (%)

Valuations

P/E (x)*

P/BV (x)

EV/EBITDA (x)

Div Yield (%)

* Consolidated

24.8

3.1

15.6

1.2

20.8

2.8

13.9

1.3

16.9

2.5

11.7

1.5

664.8

67.6

40.4

43.8

-18.1

351.4

14.5

12.4

27.7

745.5

76.3

48.4

52.4

19.6

392.8

14.4

12.5

26.9

833.7

88.2

59.6

64.5

22.9

440.4

14.8

12.9

26.9

BTG Manufacturing: FY16 improvement to be led by strong leverage

During FY13, BTG business reported net profit of INR520m, and is

commendable given that the capacity utilization stood at sub-50%. The

improved performance is also being led by the fast tracked indigenization

program, with current levels at ~80-85% for boilers and ~60% for turbines.

Given the possible pick up in power generation project awards, we expect

revenues to increase 35% during FY16E/FY13 and net profit at INR2.2b in FY16.

Tapping opportunities globally and also spares and services in India

L&T-MHI BTG manufacturing unit in Hazira is part of the MHI global network,

and thus would be a beneficiary of the outsourcing possibilities by MHI for its

global requirements. L&T MHI Boilers is also looking for opportunities to make

inroads for operational spares for pressure parts and coal pulverizers in the

Indian market. We understand that, going forward, adding capabilities in

Repairs and Maintenance and Operations of power plants will be an important

growth driver.

Shareholding pattern (%)

Sep-13 Jun-13 Sep-12

Promoter

Dom. Inst

Foreign

Others

0.0

37.3

19.2

43.5

0.0

36.8

20.0

43.2

0.0

37.8

19.5

42.7

Maintain Buy, but risk-reward increasingly skewed

For L&T, we expect consolidated earnings CAGR of 6.4% during FY13-16E, and

the muted growth is largely a reflection of: i) expectations of margin pressures

in E&C business from 12% in FY13 to 10.8% in FY16 given possibility of increased

competitive intensity, adverse project mix towards government contracts and

also higher contribution of overseas revenues (at 23% in FY16, vs 19% in FY13),

and ii) increased losses from asset development portfolio, at INR8b in FY16E vs

INR3.7b in FY13. Maintain

Buy,

with revised SOTP based price target of

INR1,186/sh, as we roll over to FY16E.

L&T is a strong play on the recovery in the investment climate, and hence the

recent stock price rally is largely led by expectations of a decisive election

mandate. Given the dependence on mega Greenfield projects for the next level

of growth trajectory, we believe that a large part of L&T’s business model

depicts characteristics of a mid to late cyclical recovery. Asset monetization is

an important near term stock driver.

Stock Performance (1-year)

9 December 2013

Larsen & Toubro

Integrated player in power value chain

L&T Power offers turnkey solutions for up to 1GW super critical coal-based power

plants, and has also demonstrated capability of executing BOP packages for both

subcritical and supercritical thermal projects on EPC basis. We believe that

integration in the value chain is the key competitive advantage; also given the

increasing trend of a large number of projects being awarded on EPC basis.

L&T Power: Technology tie-ups for Product Manufacturing

Technology Provider

Mitsubishi Electric Corporation

Mitsubishi Heavy Industries

Clyde Bergemann, USA

CMI, Belgium

Howden

Sargent and Lundy, USA

Product

High capacity Generators

Supercritical Boilers & turbine generators, and pulverizers

Electrostatic Precipitators

Heat Recovery Steam Generators

Axial Fans and Air Pre-heaters

Power Plant Engineering

Source: MOSL, Company

L&T Power: Large part of the auxiliaries manufactured in-house

Product

Critical piping

Coal Pulverizers

Foundry

Heat Exchangers

Comments

Commissioned in March 2011, has an annual fabrication capability of 12,000

tons of critical piping , including alloy steel piping for high pressure and high

temperature steam conditions

Manufactured as part of L&T-MHI Boilers

Set up heavy foundry with capacity of 2500tons pa; and capable of producing

castings of up to 60 tons

Heavy Engineering supplies heat exchangers and vessels for power plants

Source: MOSL, Company

We believe that integration

in the value chain is the key

competitive advantage; also

given the increasing trend

of a large number of

projects being awarded on

EPC basis

L&T Power: Integrated offering in the value chain

Segment

Engineering Services

Construction and

Erection

Electrical and

Automation

Capability

L&T Sargent and Lundy; one of the key players for designing power plants

globally

Extertise of building 100+ power plants, capacity 35GW

Leading provider of turnkey solutions for switchyards in India; executed sub-

stations ranging from 33kv to 400kv; manufacturer of LV and MV Switchgear

products

Source: MOSL, Company

L&T MHI Boiler: FY16 improvement led by operating and financial leverage



Given the increased indigenization levels of ~80-85%, the boiler business

reported gross margins of 14.3% in FY13 (vs 10.3% in FY12), which is

encouraging. Reported EBIDTA margins also improved to 8.7% in FY13 (vs 1.7%

YoY) and is being supported by: i) Embedded derivative gains of INR741m and

ii) Provision write backs of INR317m. Adjusted for the same, net profits stand at

just INR348m, vs reported INR1.4b.

During FY13, order intake stood at INR19.3b and closing order book stood at

INR90b (we understand that this includes slow moving orders of Jaiprakash

Karchana 1,980MW and Rajpura 700MW).

We model revenue decline of 7% till FY15 to INR21.9b and EBIDTA margins at

4.5% / 5.2% in FY14/15 respectively; vs 8.7% in FY13. We model recovery in

FY16E led by an improvement in the BTG ordering cycle, and expect revenues at

9 December 2013

Larsen & Toubro

INR29b (up 35% YoY) and EBIDTA margins at 7.9%. We estimate net profits at

INR535m in FY14, INR647m in FY15 and INR1.7b in FY16 largely led by operating

and financial leverage.

L&T MHI Boilers: strong profits of INR1.4b in FY13 supported by Derivative gains and

provisions write back (INR m)

FY12

Revenues

% YoY

Gross Profit

Gross Margins (%)

EBIDTA

EBIDTA (%)

Net Profit

24,250

140.4

2,498

10.3

417

1.7

111

FY13

23,598

-2.7

3,380

14.3

2,060

8.7

1,414

FY14E

22,603

-4.2

3,390

15.0

1,025

4.5

535

FY15E

21,902

-3.1

3,504

16.0

1,020

4.7

554

FY16E

29,486

34.6

5,307

18.0

2,327

7.9

1,685

Source: MOSL, Company

L&T MHI Turbine Generator: Improving indigenization levels to drive

margins



Revenues in FY13 declined 19% YoY to INR9.9b; however given the various

initiatives in terms of cost rationalization, improved supply chain management,

etc, the gross margin improved meaningfully from 6.9% in FY12 to 15.1% in

FY13. We understand that indigenization levels currently stands at 60%, and the

next phase in terms of heavy forgings will be important in driving the longer-

term margin profile.

EBIDTA margins stood at 3.3% in FY13 vs 2.9% YoY, and were impacted by forex

provisions of INR421m. Adjusted for the same, EBIDTA margins in FY13

improved meaningfully to 7.5% in FY13. Forex debt outstanding as at March

2013 stands at INR9.6b; and given the sharp currency volatility, we model in

exchange loss of INR700m in FY14.

Net loss in FY13 stood at INR895m, and given the constrained business

environment / currency volatility, we model in losses at INR1.2b in FY14 and

declining to INR187m in FY15. For FY16, given our expectations of a recovery in

BTG ordering, we model in revenues at INR15.7b (up 49% YoY), EBIDTA margins

at 9.7% (up 100bpa YoY) and net profits at INR473m.

L&T MHI Turbine Generator: FY13 impacted by forex loss of INR421m (INR M)

FY12

Revenues

% YoY

Gross Profit

Gross Margins (%)

EBIDTA

EBIDTA (%)

Net Profit

12,288

9.2

849

6.9

361

2.9

(171)

FY13

9,923

-19.2

1,499

15.1

328

7.5

(895)

FY14E

8,373

-15.6

1,340

16.0

(60)

7.6

(1,221)

FY15E

10,545

25.9

1,687

16.0

917

8.7

(187)

FY16E

15,684

48.7

2,588

16.5

1,527

9.7

473

Source: Company, MOSL

Tapping opportunities globally and also spares and services in India



We understand that the BTG manufacturing unit in Hazira is part of the MHI

global network, and thus would be a beneficiary of the outsourcing possibilities

by MHI for its global requirements. L&T in its FY13 Annual Report had also

9 December 2013

Larsen & Toubro



stated that “The Joint Ventures with Mitsubishi Heavy Industries for

manufacture of Steam Turbines and Steam Generators are seeking to supply

components to MHI’s third country projects.” It also stated that “The export

market thrust which is an integral part of the company’s business strategy got

impetus as the company bagged a prestigious order from MHI to supply

pressure parts for Rabigh Arabian Water Electricity Company, Saudi Arabia.”

L&T MHI Boilers is also looking for opportunities to make inroads for operational

spares for pressure parts and coal pulverizers in the Indian market. We

understand that, going forward, adding capabilities in Repairs and Maintenance

and Operations of power plants will be an important driver.

Maintain Buy, but risk-reward increasingly skewed

For L&T, we expect consolidated earnings CAGR of 6.4% during FY13-16E, and the

muted growth is largely a reflection of: i) expectations of margin pressures in E&C

business from 12% in FY13 to 10.8% in FY16 given possibility of increased

competitive intensity, adverse project mix towards government contracts and also

higher contribution of overseas revenues (at 23% in FY16, vs 19% in FY13) ii)

increased losses from asset development business, at INR8b in FY16E vs INR3.7b in

FY13. Maintain

Buy,

with revised SOTP based price target of INR1,186/sh, as we roll

over to FY16E.

Increased contribution of overseas orders

Domestic execution has been impacted by several factors

Source: MOSL, Company

Overseas revenues to contribute ~47% of the consolidated profits in FY14E

FY12

125

643

Revenues (INR b)

FY13 FY14E FY15E FY16E

109

105

132

164

200

218

261

309

745

FY12

3.2

1.5

1.3

3.8

9.8

EPS (INR/share)

FY13 FY14E FY15E FY16E

6.5

6.3

7.9

9.8

0.8

1.6

2.0

2.1

3.9

4.1

5.4

6.4

5.7

7.1

8.0

8.2

16.9 19.2 23.3 26.6

Source: MOSL, Company

E&C, MIP, Electricals

FZE

IES

Infotech

Total

L&T Consolidated

% Share

Without drawing any conclusions, we understand that L&T could possibly be a

‘mid’ to ‘late’ stage beneficiary of any possible uptick in investment cycle:



Overseas business is expected to contribute ~47% of the consolidated profits in

FY14E, of which 60% is being contributed by largely contributed by IT services.

9 December 2013

Larsen & Toubro



Comparatively lower operating leverage vs peers, with FY13 contribution

margins at 21.2% vs adj EBIDTA margins at 11%.

L&T’s order intake has been relatively insulated even in a turbulent

environment, given the adaptability and diversity, with management guiding for

20% order intake growth in FY14E. This factor could also possibly limit the near

term business upsides (in terms of percentages, given the higher base).

Asset monetization an important near-term driver

For L&T, subsidiaries are expected to contribute 45% of the invested capital, but just

5% of the consolidated profits in FY14. L&T's consolidated RoE has deteriorated

significantly from 31% in FY07 to 16% in FY13. Correcting the capital structure and

improving RoEs are important stock triggers. For the infrastructure development

business, we expect losses to increase from INR3.9b in FY13 (also supported by

previous year goodwill write back) to INR5.5b / INR5.3b / INR8b in FY14/15/16

respectively, and is led by commissioning of ~INR63b of road portfolio. Successful

asset monetization will be an important event to monitor, and will be the key

interim value driver.

Consolidated Debt ballooning, given large investments in Concession business (INR b)

Finance

Hydrocarbon

Overseas Infra

Power Dev

Heavy Engg

Shipbuilding

Power BTG

Property Dev

Concession

Corporate

Machinery

Infotech

Total

Excl Finance

FY12

209

384

176

FY13

282

100

537

255

FY14E

324

134

641

317

FY15E

FY16E

373

428

189

244

754

875

382

447

Source: MOSL, Company

9 December 2013

Larsen & Toubro

SOTP valuation

Method

Construction Business

L&T Standalone

International Ventures (L&T FZE)

Service Segments

Infotech

Finance

General Insurance

Sapura Shipping

L&T Realty

Asset Ownership / Project Developer

Infrastructure Development Projects

Power Development Projects

Manufacturing Ventures

- Power Equipments

- Special Steel and Heavy Forgings

- L&T Komatsu

- Audco India

FY16E PER (x)

FY16E PBV (x)

FY16E PER (x)

Valuation Value Value

multiple (INR b) (INR/sh)

15.0

10.0

1.20

1.0

1.5

1.0

0.5

1.0

10.0

818

886

Rationale

At par with Market average

At par to second tier IT companies

At par with NBFCs

At par with industry average

Lower than Net Worth to capture the macro

volatility

At 50% of BV, to factor in the challenges of fuel

availability

At Book Value, given the business headwinds

In line with industry average

Revenue growth and margins have shown strong

consistency

In line with industry average

- EWAC Alloys

FY16E PER (x)

10.0

Less: Holding Company Discount of 20%

-74

Total

1,186

Note: Seawoods and Shipbuilding JVs not considered in SOTP as these projects are funded through advances

Source: MOSL

9 December 2013

Larsen & Toubro

Consolidated profits to remain constrained, given losses in manufacturing and asset development businesses (INR m)

INR m

Standalone

Consolidated

Addn to Standalone PAT

Contribution from key subsidiaries

Service Sector

L&T Infotech

L&T Finance

Overseas E&C

L&T International FZE

Asset Development

L&T IDPL

L&T Power Development

Sapura Shipping

L&T Sea Woods

L&T Realty

Manufacturing

L&T MHI Turbine & Boilers

L&T Special Steel & Heavy Forgings

L&T Ship Building

Komatsu

Audco

EWAC

Divestire Gains (Diff)

MTM Provision

Other Subsidiaries

Total of all Subsidiaries

FY09

27,092

30,046

2,953

FY09

4,461

2,674

1,788

-930

473

-93

355

100

FY10

43,760

54,507

10,747

FY10

5,683

2,873

2,811

1,563

3,566

3,261

-22

298

348

-475

-22

330

160

120

FY11

39,580

44,562

4,982

FY11

7,088

3,160

3,928

1,977

150

-1,132

134

-32

1,146

696

-412

-32

305

165

272

FY12

44,565

46,937

2,372

FY12

6,850

4,190

2,660

1,571

-3,101

-3,087

-416

-5

335

1,005

-31

-83

-24

305

553

FY13

49,106

52,056

2,950

FY13

10,450

6,290

4,160

789

-3,738

-3,381

177

-540

-1,475

265

-1,155

-1,906

398

581

FY14E

45,570

38,957

-6,612

FY14E

12,142

7,932

4,210

1,652

-5,461

-5,793

178

-50

204

-6,450

-350

-1,582

-5,883

116

386

592

FY15E

52,275

48,340

-3,935

FY15E

14,284

8,919

5,366

1,981

-5,253

-6,216

302

-50

696

-4,879

187

-1,506

-5,018

444

651

FY16E

60,080

59,392

-688

FY16E

15,603

9,142

6,461

2,180

-7,981

-9,083

352

-50

785

-1,297

1,101

-1,484

-2,894

918

716

4,091

202

11,160

363

9,911

259

6,325

271

6,026

271

1,882

271

6,134

271

8,505

Source: MOSL, Company

9 December 2013

Larsen & Toubro

L&T: Operating Matrix

Order Intake (INR b)

Domestic

Growth (%)

Overseas

Growth (%)

Order Book (INR b)

Growth (%)

Process

Oil & Gas

Power

Infrastructure

Others

BTB (x)

BTB (x) E&C

Gross Revenues (INR b)

Growth (%)

E&C

MIP

EBG

Others(including eliminations)

EBITDA (INR b)

E&C

MIP

EBG

Others(including eliminations)

EBITDA Margin (%)

E&C

MIP

EBG

Others(including eliminations)

FY08

420

361

527

121

190

2.1

2.7

252

190

12.9

12.8

18.9

17.0

-1.7

FY09

516

450

703

112

155

288

2.1

2.5

340

280

13.0

12.9

20.1

13.2

1.9

FY10

696

661

-47

1,002

160

150

301

331

2.7

3.1

370

318

14.5

13.6

22.1

15.7

46.0

FY11

798

718

129

1,302

208

156

417

469

3.0

3.4

439

377

14.2

13.6

21.2

16.7

4.5

FY12

706

579

-19

127

1,457

219

146

408

627

2.7

3.1

531

465

12.8

12.7

19.5

12.7

0.5

FY13

880

731

150

1,536

154

123

430

753

2.5

2.8

608

541

12.3

11.5

16.3

13.6

34.2

FY14E

891

641

-12

250

1,766

153

187

469

855

101

2.7

3.0

661

580

11.6

11.8

12.0

13.5

4.2

FY15E

956

716

240

-4

1,980

162

230

556

895

137

2.7

3.0

742

651

11.4

11.0

10.0

12.5

21.2

FY16E

1,086

798

288

2,236

181

268

663

947

176

2.7

3.1

830

726

11.7

10.8

12.0

12.5

32.0

Standalone EPS*

Consolidated EPS

23.2

26.1

30.7

34.2

34.3

41.1

37.2

46.4

44.3

52.0

18.0

16.5

12.0

44.9

53.4

16.2

14.5

14.9

45.0

43.8

14.5

19.4

49.6

52.4

14.4

19.9

59.1

64.3

14.8

17.5

RoE (%) [Standalone]

22.0

21.7

17.4

16.6

RoE (%) [Consolidated]

22.6

21.8

22.3

17.3

Working Capital (% of sales) - Adj for Subs Adv

7.1

9.3

5.5

6.7

Standalone EPS, excluding dividend and interest received from subsidiary companies

Source: Company, MOSL

9 December 2013

Larsen & Toubro

Financials and valuation

Income statement

Y/E March

Revenues

Change (%)

Adj EBITDA

EBITDA Margin (%)

Depreciation

EBIT

Interest

Other Income

Extraordinary items

PBT

Tax

Tax Rate (%)

Reported PAT

Adjusted PAT

Change (%)

Cons PAT

Adj Cons PAT

2011

439.1

18.6

56.3

12.8

5.9

50.4

6.2

11.5

-3.3

59.0

19.4

32.9

39.6

36.3

13.8

44.6

42.4

2012

531.7

21.1

64.6

12.2

6.8

55.8

6.7

13.4

-0.6

63.1

18.5

29.4

44.6

45.4

25.2

46.9

47.7

2013

608.7

14.5

66.8

11.0

8.0

55.9

9.8

18.5

-2.5

67.1

18.0

26.8

49.1

47.3

4.3

52.1

49.3

2014E

658.3

8.1

69.7

10.6

8.8

58.8

11.5

16.4

0.0

63.7

18.2

28.5

45.6

47.0

-0.6

39.0

40.4

(INR Billion)

2015E

738.2

12.1

76.3

10.3

9.6

66.7

11.0

17.4

0.0

73.1

20.8

28.5

52.3

11.2

48.4

2016E

825.6

11.8

88.2

10.7

10.1

756.5

11.0

17.1

0.0

762.5

24.0

3.1

738.5

60.2

15.1

59.6

Balance sheet

Y/E March

Share Capital

Reserves

Net Worth

Debt

Deferred Tax

Total Capital Employed

Gross Fixed Assets

Less: Acc Depreciation

Net Fixed Assets

Capital WIP

Investments

Current Assets

Inventory

Debtors

Cash & Bank

Loans & Adv, Others

Curr Liabs & Provns

Curr. Liabilities

Provisions

Net Current Assets

Total Assets

E: MOSL Estimates

2011

1.2

217.2

218.5

71.6

2.6

292.7

89.5

23.0

66.4

7.7

146.8

350.1

15.8

124.3

17.3

192.8

278.4

255.9

22.4

71.7

292.7

2012

1.2

251.0

252.2

99.0

1.3

352.5

105.5

29.5

76.0

7.6

158.7

434.0

17.8

187.2

17.8

211.3

323.8

299.9

23.9

110.2

352.5

2013

1.2

290.2

291.4

88.3

2.4

382.2

119.8

36.8

83.1

6.0

161.0

471.7

20.6

226.1

14.6

210.4

339.6

315.9

23.7

132.1

382.2

2014E

1.2

323.1

324.4

120.0

2.0

446.3

131.3

45.6

85.7

4.5

176.2

523.4

23.0

250.2

17.9

232.3

343.0

318.6

24.5

180.4

446.8

(INR Billion)

2015E

1.2

361.3

362.6

120.0

2.0

484.6

142.3

55.1

87.2

4.5

169.5

601.7

24.0

280.5

36.0

261.2

377.8

351.6

26.3

223.9

485.0

2016E

1.2

405.3

406.6

120.0

2.0

528.6

162.3

65.3

97.0

4.5

165.5

695.6

26.8

305.5

78.7

284.6

433.6

404.8

28.8

262.0

529.0

9 December 2013

Larsen & Toubro

Financials and valuation

Ratios

Y/E March

Basic (INR)

Adj Standalone EPS

Adj Consolidated EPS

Book Value

DPS

Payout (incl. Div. Tax.)

Valuation(x)

P/E (Consolidated)

Cash P/E

Price / Book Value

EV/Sales

EV/EBITDA

Dividend Yield (%)

Profitability Ratios (%)

RoE

RoCE

Cons ROE

Turnover Ratios (%)

Asset Turnover (x)

Debtors (No. of Days)

Inventory (No. of Days)

Leverage Ratios (%)

Net Debt/Equity (x)

2011

39.7

46.4

239.2

9.7

24.3

2012

49.4

52.0

274.6

11.0

23.3

2013

51.3

53.4

315.7

12.3

24.8

18.2

15.6

3.1

1.5

13.6

1.3

19.7

18.5

18.4

1.6

103.3

13.1

-0.1

18.9

17.3

17.1

1.6

128.5

12.2

0.1

18.1

15.2

15.5

1.7

135.6

12.4

0.1

2014E

50.9

43.8

351.4

12.7

31.3

24.8

18.2

2.8

1.4

15.4

1.2

14.8

14.2

1.6

138.7

12.8

0.2

2015E

56.6

52.4

392.8

14.2

29.0

20.8

15.5

2.5

1.3

13.9

1.3

15.2

14.3

1.6

138.7

11.9

0.1

2016E

65.2

64.5

440.5

16.3

27.2

16.9

12.9

2.2

1.1

11.7

1.5

18.0

15.5

1.6

135.1

11.9

0.1

Cash flow statement

Y/E March

OP/(Loss) before Tax

Depreciation

Others

Interest

Direct Taxes Paid

(Inc)/Dec in Wkg Cap

CF from Op. Activity

(Inc)/Dec in FA & CWIP

(Pur)/Sale of Invt

Others

CF from Inv. Activity

Inc/(Dec) in Net Worth

Inc / (Dec) in Debt

Interest Paid

Divd Paid (incl Tax)

CF from Fin. Activity

Inc/(Dec) in Cash

Add: Opening Balance

Closing Balance

E: MOSL Estimates

2011

55.7

6.0

0.0

6.2

19.4

-8.0

43.8

-16.4

6.8

-26.2

-35.8

7.9

3.6

6.2

9.0

-3.6

4.3

14.3

18.6

2012

63.1

7.0

0.0

6.7

18.5

-33.3

25.0

-16.5

5.0

-21.5

-33.1

-1.0

27.3

6.7

10.0

9.7

1.6

17.3

18.9

2013

67.1

8.2

0.0

9.8

18.0

-26.4

40.7

-13.6

12.1

-13.2

-14.7

3.4

-10.6

9.8

11.1

-28.1

-2.1

17.8

15.7

2014E

63.7

8.8

0.0

11.5

18.2

-36.7

29.1

-10.0

3.7

-27.0

-33.3

0.0

31.7

11.5

12.2

7.9

3.8

14.6

18.3

(INR Billion)

2015E

73.1

9.6

0.0

11.0

20.8

-17.8

55.1

-11.0

22.1

-23.1

-11.9

0.0

11.0

12.6

-23.6

19.5

17.9

37.4

2016E

84.2

10.1

0.0

11.0

24.0

4.0

85.3

-20.0

20.0

-15.4

0.0

11.0

14.1

-25.1

44.8

36.0

80.8

9 December 2013

9 December 2013

Update | Sector: Capital Goods

Thermax

BSE Sensex

20,958

S&P CNX

6,241

CMP: INR670

TP: INR850

Buy

Stock Info

Bloomberg

Equity Shares (m)

52-Week Range (INR)

1, 6, 12 Rel. Per (%)

M.Cap. (INR b)

M.Cap. (USD b)

Multiple growth drivers

TMX IN

119.2

695/526

8/4/3

79.8

1.3

Internationalization I New Product Launches I O&M Business

Beneficiary of few structural trends

TMX is benefiting from few structural trends: (1) increased energy pricing

(electricity prices up 15-20% over last 18 months) driving demand for energy

efficiency products (2) Hunt for alternative energy and TMX derives ~30% of

revenues from Green products (3) stringent government regulations and

increased environmental concerns (4) currency depreciation is also leading to

increased possibilities of exports (currently at 19% of revenues), etc.

Financial Snapshot (INR b)

Y/E Mar

2014E 2015E 2016E

Net Sales

53.7 58.2 70.0

EBITDA

Adj PAT

EPS (INR)

EPS Gr. (%)

BV/Sh. (INR)

RoE (%)

RoCE (%)

Payout (%)

Valuations

P/E (X)

P/BV (X)

Div Yield (%)

26.5

3.8

1.0

22.7

3.4

13.0

1.2

17.0

3.0

10.2

1.6

4.8

3.0

25.2

(6.6)

15.3

12.8

32.4

5.6

3.5

29.5

17.0

16.1

14.2

31.7

7.0

4.7

39.4

33.3

19.0

17.2

32.7

Access to global markets - target 40% of revenues

Overseas revenues contributed 27% of the consolidated revenues in FY13, and

we expect the share to increase to 40% by FY16E. Key drivers: (1) Many of

TMX's technology tie-ups provide opportunities to access overseas markets (2)

Danstoker and Rifox (FY13 revenues INR3.6b) are witnessing strong growth

particularly in biomass, heat pumps, etc and Danstoker is fully booked for FY14

(3) TMX's successful execution track record for EPC projects also expands

possibilities for more such contracts (4) Refinery capex in ME is an important

driver (5) Initial forays into LATAM, Africa, Europe and ME and attempt is to

scale-up (6) Service exports have increased from INR80-90m in FY11/12 to

INR561m in FY13, driving growth (7) Fortified positioning in HRSG (8) TBW also

expected to receive preference orders from international markets.

177.1 197.3 223.8

EV/EBITDA (X) 15.5

Overseas business to support growth, domestic business constrained

Shareholding pattern (%)

Promoter

Dom. Inst

Foreign

Others

Sep-13 Jun-13 Sep-12

62.0

8.3

8.8

10.3

15.5

14.6

13.7

14.2

14.7

14.0

Stock Performance (1-year)

We expect TMX to report 4% revenue CAGR till FY15; and expect acceleration in

FY16E (up 20% YoY). We understand that TMX is possibly an ‘early’ stage

beneficiary of the possible uptick in the investment climate, particularly in the

heating / WHR segment (25-28% of consolidated revenues). During FY13,

exports order intake at INR11.5b was 24% of total intake and was up 46% YoY

(revenues INR8.8b). Domestic business remains constrained; however large

order finalizations including JSPL 1,320MW, Fertilizer projects, Hydrocarbon

capex, Cement capacity expansion, etc are important drivers for TMX.

Valuation and View

We expect TMX to report earnings CAGR of 5% over FY13-15, and 33% in FY16E.

We maintain

Buy,

with an 18-month price target of INR850 (20x FY16E at

INR762/sh and INR86/sh in subsidiaries). Key concern has been the muted

domestic order intake in 1HFY14 / 4QFY13 which declined to INR5-7b/qtr vs

run-rate of INR10b. Constrained near term demand environment will impact

execution, and could be an important overhang.

9 December 2013

Thermax

Capacity to manufacture 3GW of boilers

Thermax Babcock & Wilcox (TBW), 51% subsidiary of TMX, is in the process of

commissioning the manufacturing facility for manufacture of utility boilers with an

annual capacity of 3GW at Shirwal, 50kms from Pune in Maharashtra. The factory

has provision for expansion to 5GW; and the initial project cost stands at INR8b with

DER of 50:50. The facility has capacity to manufacture both Supercritical and

Subcritical boilers (unlike L&T-MHI, where the technology license agreement is for

supercritical sets).

TBW: Key Products being manufactured

Products

Sub critical Boilers

Super critical Boilers

Low NOx Combustion

Roll Wheel Pulverizers

Range

300-950MW

upto 1300MW

15-104 TPH

Source: MOSL, Company

Reliance CFBC order / overseas projects to provide initial execution



TMX management in a recent concall stated that manufacturing for the recent

Reliance order of 9 CFBC boilers with a capacity of 500TPH each will be partly

taken up at the new facility.

Also, there are options of bagging orders from the overseas markets, as part of

the global manufacturing network of Babcock and Wilcox. The TBW

manufacturing plant is the only second plant globally (apart from China), and

being a modern plant combined with the sharp currency depreciation, we

believe that competitiveness for the Indian manufacturing has comparatively

improved.

In May 2011, Babcock & Wilcox signed a MOU with Toshiba to co-operatively

explore strategic, manufacturing, research and other opportunities in advanced

supercritical power generation and solar energy technologies around the world.

The memorandum outlines a framework under which B&W PGG and Toshiba

can pursue technical collaboration on next generation thermal and solar

technologies and explore cooperation on project opportunities in Asia, India and

other emerging markets.

We expect the JV to continue to report losses in FY16, largely given under

absorption of operating and financing costs. We expect losses to expand from

INR303m in FY13 to INR1.1b in FY16E. Given the break-even utilization levels at

~1.2-1.8GW pa, the earnings swing to any order intake can be meaningful, and

we would be watchful of the trends.

Access to global markets - target 40% of revenues

Overseas revenues contributed 27% of the consolidated revenues in FY13, and we

expect the share to increase to 40% by FY16E. Key drivers: (1) Many of TMX's

technology tie-ups provide opportunities to access overseas markets (2) Danstoker

and Rifox (FY13 revenues INR3.6b) are witnessing strong growth particularly in

biomass, heat pumps, etc and Danstoker is fully booked for FY14 (3) TMX's

successful execution track record for EPC projects also expands possibilities for more

such contracts (4) Refinery capex in ME is also an important driver (5) Initial forays

into LATAM, Africa, Europe and ME and attempt is to scale-up (6) Service exports

9 December 2013

Thermax

have increased from INR80-90m in FY11/12 to INR561m in FY13, driving growth (7)

Fortified positioning in HRSG (8) TBW also expected to receive preference orders

from international markets.

TMX: Overseas Revenues (% of Consolidated Revenues)

(INR m)

Thermax Europe

Thermax USA

Thermax Zheziang

Danstoker

Exports

Total

Consolidated Revenues

Overseas Revenues (% of total)

FY11

308

523

214

10,660

11,705

53,921

21.7

FY12

353

644

436

5,131

11,430

17,994

61,698

29.2

FY13

435

663

707

3,603

9,839

15,247

55,656

27.4

FY14E

FY15E FY16E

609

822

863

729

802

882

1,061

1,273

1,401

4,684

5,854

7,318

11,039

13,247 17,221

18,122

21,999 27,686

55,131

59,805 71,728

32.9

36.8

38.6

Source: MOSL, Company

Maintain Buy, with revised price target of INR850 (20x FY16E)

We believe TMX would benefit from structural trends, which will enable it to make a

transition to the 'Big League' in the next economic upturn. We expect acceleration in

TMX's revenue growth in FY16E (up 20% YoY); we understand that TMX is possibly

an ‘early’ stage beneficiary of the possible uptick in the investment climate,

particularly in the heating / WHR segment (25-28% of consolidated revenues). We

expect TMX to report earnings CAGR of 5% over FY13-15, and 33% in FY16E. We

maintain

Buy,

with an 18-month price target of INR850 (20x FY16E at INR762/sh and

INR86/sh in subsidiaries). Key concern has been the muted domestic order intake in

1HFY14 / 4QFY13 which declined to INR5-7b/qtr vs run-rate of INR10b. Constrained

near term demand environment will impact execution, and could be an important

overhang.

9 December 2013

Thermax

Thermax: Operating Martix

INR m

Standalone Order intake

Energy

- Power EPC

- Energy Ex Power EPC

Environment

Order intake (% YoY)

Energy

- Power EPC

- Energy Ex Power EPC

Environment

Standalone Revenues

Energy

Environment

% YoY

Energy

Environment

Standalone Revenues

Domestic (excl Power EPC)

Domestic (Power EPC)

Exports (Excl Deemed)

% YoY

Domestic (excl Power EPC)

Domestic (Power EPC)

Exports

EBIT Margin (%)

Energy

Environment

EPS Composition (INR/Sh)

Standalone

TMX-Babcock JV

Other Subsidiaries

Consolidated

Balance Sheet Details - Standalone

Net Working Capital (Days)

NWC, excl Customer Advances (Days)

Net Cash / (Debt) INR M

RoE (%) Consolidated

FY11

53,180

41,736

15,300

26,436

11,444

-8.3%

-10.0%

-28.5%

5.8%

-1.2%

50,235

38,796

11,439

54.5%

60.9%

35.9%

50,235

25,350

14,225

10,660

54.5%

25.9%

144.0%

62.5%

11.8

10.0

12.6

FY12

40,300

28,830

5,169

23,661

11,470

-24.2%

-30.9%

-66.2%

-10.5%

0.2%

54,360

41,509

12,851

8.2%

7.0%

12.3%

54,360

29,073

13,857

11,430

8.2%

14.7%

-2.6%

7.2%

11.1

10.7

12.4

FY13

48,580

36,550

15,020

21,530

12,030

20.5%

26.8%

190.6%

-9.0%

4.9%

47,693

36,383

11,310

-12.3%

-12.0%

47,693

29,202

8,652

9,839

-12.3%

0.4%

-37.6%

-13.9%

11.1

10.4

10.5

FY14E

51,657

42,033

7,500

34,533

9,624

6.3%

15.0%

-50.1%

60.4%

-20.0%

45,917

34,763

11,155

-3.7%

-4.5%

-1.4%

45,917

24,358

10,520

11,039

-3.7%

-16.6%

21.6%

12.2%

10.3

10.0

FY15E

50,998

39,931

10,000

29,931

11,068

-1.3%

-5.0%

33.3%

-13.3%

15.0%

48,288

38,510

9,778

5.2%

10.8%

-12.3%

48,288

25,226

9,815

13,247

5.2%

3.6%

-6.7%

20.0%

10.7

10.5

10.3

FY16E

60,645

47,917

12,285

35,632

12,728

18.9%

20.0%

22.9%

19.0%

15.0%

57,332

45,578

11,754

18.7%

18.4%

20.2%

57,332

30,153

9,957

17,221

18.7%

19.5%

1.4%

30.0%

11.2

11.5

11.0

32.1

0.0

-0.1

32.0

34.1

-0.8

0.5

33.9

29.4

-1.3

-1.1

27.0

26.4

-3.2

2.0

25.2

30.0

-4.7

4.3

29.5

38.1

-4.8

6.1

39.4

-11.9

60.5

6,910

31.9

6.6

55.6

6,050

27.4

18.5

69.8

6,206

18.4

30.1

84.3

7,717

15.3

27.6

83.5

10,493

16.1

13.0

72.1

15,027

19.0

Source: Company, MOSL

9 December 2013

Thermax

Financials and valuation

Income statement

Y/E March

Total Revenues

Change (%)

Raw Materials

Staff Cost

Other Expenses

EBITDA

% of Total Revenues

Depreciation

Other Income

Interest

PBT

Tax

Rate (%)

Adjusted PAT

EO Income (net)

Reported PAT

Change (%)

2011

52,472

60.3

34,803

4,547

8,266

5,669

10.8

541

652

5,736

1,965

34.3

3,818

169.0

2012

60,313

14.9

38,435

5,578

10,795

5,919

9.8

663

830

122

5,964

2,043

34.3

4,034

5.7

2013

54,331

-9.9

33,157

6,122

10,720

4,999

9.2

771

769

165

4,832

1,773

36.7

3,219

-20.2

2014E

53,687

-1.2

31,010

6,375

12,245

4,783

8.9

1,057

763

350

4,139

1,494

36.1

3,008

-6.6

(INR Million)

2015E

58,231

8.5

34,398

7,153

11,916

5,562

9.6

1,269

921

510

4,703

1,720

36.6

3,520

17.0

2016E

70,012

20.2

41,221

7,935

14,718

7,017

10.0

1,302

1,121

500

6,336

2,195

34.6

4,691

33.3

Balance sheet

Y/E March

Share Capital

Reserves

Net Worth

Loans

Deferred Tax Liability

Capital Employed

Gross Fixed Assets

Less: Depreciation

Net Fixed Assets

Capital WIP

Investments

Curr. Assets

Inventory

Debtors

Cash & Bank Balance

Loans & Advances

Other Assets

Current Liab. & Prov.

Creditors

Other Liabilities

Provisions

Net Current Assets

Application of Funds

E: MOSL Estimates

2011

238

12,911

13,448

1,480

299

15,448

10,678

2,825

7,853

354

2,415

30,370

3,657

10,209

6,880

4,015

5,610

2012

238

16,055

16,671

2,704

378

20,491

11,929

3,488

8,441

2,466

2,395

33,427

3,666

13,707

6,983

3,560

5,512

2013

238

18,449

19,070

4,210

383

24,382

12,962

4,236

8,726

5,175

4,430

31,319

3,240

15,468

3,211

4,125

5,276

2014E

238

20,481

21,102

4,210

383

26,051

18,737

5,293

13,444

400

4,430

33,610

3,221

15,032

5,496

4,492

5,369

(INR Million)

2015E

238

22,886

23,507

4,210

383

27,919

19,737

6,562

13,175

400

4,430

37,318

3,494

16,305

7,068

4,628

5,823

2016E

238

26,043

26,665

4,210

383

30,526

21,237

7,864

13,373

400

4,430

44,023

4,201

19,603

8,236

5,682

6,301

8,928

3,264

2,782

4,825

15,448

9,690

5,495

2,721

7,190

20,491

9,723

5,404

2,812

6,051

24,382

9,664

5,373

2,779

7,777

26,051

10,482

5,782

3,013

9,914

27,919

12,602

6,842

3,620

12,323

30,526

9 December 2013

Thermax

Financials and valuation

Ratios

Y/E March

Basic (INR)

EPS

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

32.0

36.6

112.9

9.0

32.6

2012

33.9

39.4

139.9

7.0

24.0

2013

27.0

33.5

160.0

7.0

30.3

2014E

25.2

34.1

177.1

7.0

32.4

2015E

29.5

40.2

197.3

8.0

31.7

2016E

39.4

50.3

223.8

11.0

32.7

20.2

16.3

12.3

1.1

3.4

1.3

26.9

19.9

15.7

1.4

3.8

1.0

23.0

16.9

13.3

1.3

3.4

1.2

17.3

13.5

10.3

1.0

3.0

1.6

31.9

29.0

27.4

22.9

18.4

14.8

15.3

12.8

16.1

14.2

19.0

17.2

3.4

2.9

104

2.2

102

2.1

102

2.1

102

2.3

0.1

0.2

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

(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

9 December 2013

2011

5,736

541

1,965

(3,329)

1,028

(3,265)

1,289

-1,976

1,017

1,401

695

1,678

729

6,702

6,880

2012

5,964

663

122

2,043

(2,262)

2,442

(3,361)

-3,342

868

1,224

122

1,246

724

(175)

6,880

6,982

2013

4,832

771

165

1,773

(2,633)

1,362

(3,765)

(2,035)

-5,800

295

1,506

165

976

660

(3,778)

6,983

3,211

2014E

4,139

1,057

350

1,494

559

4,611

(1,000)

-1,000

(128)

350

976

(1,454)

2,157

3,211

5,496

(INR Million))

2015E

4,703

1,269

510

1,720

(565)

4,197

(1,000)

-1,000

510

1,115

(1,536)

1,661

5,496

7,068

2016E

6,336

1,302

500

2,195

(1,241)

4,701

(1,500)

500

1,533

(1,947)

1,254

7,068

8,235

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