BHEL – Motilal Oswal Research Report

BHEL‘S Order backlog at the end of 1QFY11 was Rs1,480b, a book-to-bill ratio of 4.4x TTM, providing the best revenue visibility in our engineering universe. We expect earnings and revenue CAGR of 22% and 24% respectively with margin expansion of 160bp at 22.1% over FY10-12. After capacity expansion to 20GW by 2012, BHEL‘s capacity will be at par with its Chinese and Korean counterparts, giving BHEL muscle to compete, execute and deliver on time. Our EPS estimates for BHEL are Rs119 for FY11 and Rs147 for FY12. Our price target is Rs2,934, an upside of 19% from current levels. Maintain Buy.