will government's massive surge in investment ... - Myiris.com

Apr-Jun 2013 Earnings Preview
Transformer/Reactor orders continued to be weak, with total orders in FY13
standing at Rs11.2bn v/s FY12 order awards of Rs27.3bn. Chinese players continued
to dominate transformer market, with market share of 40-45% in both, Q4FY13 and
FY13 (Exhibit 5). Dominance of foreign players in 765kv transformer orders
continued, with market share of ~48% in FY13 (Exhibit 6). Commentary for industry
players suggest that prices have stabilized at lower levels and not falling further;
however, we are yet to see any uptick in prices. We believe equipment ordering
should pick up in FY14 and should benefit players like ABB, Siemens and Crompton
Greaves.
Stock Performance
Substation orders contributed 31% to PWG’s Q4FY13 overall ordering. However, for
FY13, contribution stood at 35% largely due to a single huge HVDC order worth
Rs25bn. While this segment continues to be fragmented, with large numbers of
small players entering the market, especially in the lower Kv space, established
MNCs like ABB, Alstom, Siemens who were losing market share are seeing a
comeback, especially in high KV range. We expect the trend to continue as market
keeps moving towards higher KV class. Within sub-station, Chinese dominated the
GIS sub-station segment.
1M 3M 6M 12M 1M 3M 6M 12M
ABB (6.0) 21.1 (18.7) (25.8) (5.4) 16.3 (16.6) (36.1)
Bharat Electronics (5.9) 5.3 (5.3) (8.1) (5.3) 0.5 (3.2) (18.4)
BHEL (3.5) 0.1 (25.1) (22.6) (3.0) (4.7) (23.0) (32.9)
Crompton Greaves - (2.1) (27.2) (31.8) 0.5 (6.9) (25.1) (42.1)
Cummins India (6.7) (12.7) (17.8) (4.1) (6.1) (17.5) (15.7) (14.4)
Kalpataru Power Transmission (10.4) (15.6) (34.6) (21.3) (9.8) (20.4) (32.4) (31.6)
KEC International (18.8) (41.8) (52.3) (46.5) (18.2) (46.6) (50.2) (56.8)
Power Grid Corporation (4.8) 1.1 (9.6) (6.8) (4.3) (3.7) (7.5) (17.1)
Siemens (8.8) 8.9 (22.8) (28.3) (8.2) 4.1 (20.6) (38.6)
Thermax 4.0 9.4 1.1 28.1 4.5 4.6 3.2 17.8
Voltas (1.7) 5.6 (25.7) (29.7) (1.2) 0.8 (23.6) (40.0)
Source: Bloomberg, PL Research
Absolute
Relative to Sensex
July 8, 2013 79