Bharat Heavy Electricals Limited (BHEL) : Sector Stalwart

Initiating Coverage
April 30, 2010

Rating Matrix
Rating : Add
Bharat Heavy Electricals Limited (BHEL)
Target : Rs 2,733
Rs 2,500
Target Period : 12 months
Potential Upside : 9.3% Sector stalwart…
A dominant industry position, wide product portfolio and strong
YoY Growth (%) relationship with government agencies make Bharat Heavy Electricals
FY09 FY10E FY11E FY12E (Bhel) the prime beneficiary of aggressive power capacity addition
Total Revenue 35.5 24.5 28.0 17.1
targets set for the XIth and XIIth plans (~178 GW). With Bhel enjoying
54% share in XIth Plan power orders and order book size of Rs 1,43,800
EBITDA 13.1 36.9 23.4 17.1
crore (FY10), the company enjoys strong sales visibility over the next
Net Profit 9.8 36.6 24.3 16.5 three or four years. However, we expect new order flows to slow down
over the next two or three years as 45% of XIIth plan orders have
Stock Metrics already been placed. We initiate coverage on the stock with ADD rating.
Bloomberg Code BHEL.IN
Strong sales visibility; robust private sector order inflows in FY10
Reuters Code BHEl.BO
Face value (Rs) 10
With an order book size of Rs 1,43,800 crore in FY10 and enhanced
execution capabilities (capacity increased by 50% in FY08-10 to 15 GW),
Promoters Holding (%) 67.72
we estimate robust growth of revenues at 22% CAGR in FY10-12E to Rs
Market Cap (Rs cr) 121,477 49,873 crore. In FY10, Bhel secured orders worth 14.7 GW from the
52 week H/L 2585/1,535 private sector (not a conventional stronghold for the company),
Sensex 17,745 contributing to the order book growth (+7.3%). In our view, the recent
Average volumes 807,580
success in the private sector bodes well for Bhel as the sector will account
for ~50% of XIIth Plan power orders (vs. 14% in the XIth Plan). Lastly,
Bhel is well positioned to capture supercritical orders (~60% in XII plan)
Price movement (Stock vs. Nifty) due to its technological partnerships, JVs with state electricity boards and
its first mover advantage in the supercritical segment.
2,800 6,000
Limited scope to grow power sector order book
2,100 4,500
Nevertheless, we estimate Bhel’s order book will peak in FY11E to Rs
(R s)
(R s)
1,400 3,000
155,339 crore as nearly 45% of the power equipment ordering for the
700 1,500 XIIth Plan is already complete (54% share of Bhel). Assuming a nearly
55% share of Bhel in XIIth Plan orders, we estimate 29 GW order inflows
0 0 in the power segment in FY11E-13E. In our view, Bhel will find it tough to
Mar-09 Jul-09 Nov -09 Mar-10
significantly expand its margins in FY11E-12E due to the continued rise of
commodity prices, execution of higher proportion of supercritical orders
BHEL Nif ty
(higher import content) and competitive pressures.
Comparable return matrix (%) Valuations
Stock return
(%)
1M 3M 6M 12M At the CMP of Rs 2,500, the stock is trading at a P/E of 22.8x in FY11E
BHEL 5.4 4.6 4.1 53.1
and 19.6x in FY12E. We have valued Bhel using the DCF methodology
due to the long execution period associated with its projects (~four
L&T 0.4 9.9 3.0 87.2
years). Despite strong sales visibility over the next three or four years,
Crompton
Greaves
3.6 10.8 32.0 192.2 new order growth and margins are likely to come under pressure. We
Thermax 9.2 10.7 33.3 218.6
are initiating coverage on the stock with an ADD rating.
Analyst’s name Exhibit 1: Key Financials
(Rs Crore) FY09 FY10E FY11E FY12E
Chirag Shah
shah.chirag@icicisecurities.com Total Revenues 26,727 33,280 42,591 49,873
EBITDA 4,231 5,790 7,144 8,365
Net Profit 3,138 4,287 5,327 6,203
PE (x) 39.0 28.5 23.0 19.7
Target PE (x) 42.6 31.2 25.1 21.6
EV/EBITDA (x) 26.5 19.4 15.7 13.4
P/BV (x) 9.4 7.6 6.1 5.0
Source: Company, ICICIdirect.com Research
ICICIdirect.com | Equity Research

Shareholding pattern (Q3FY10) Company Background

Bharat Heavy Electricals Limited (Bhel), India’s largest supplier of power
Shareholding Holding (%)
plant equipment, was established more than four decades ago. The
Promoter Holding 67.7
FII & MFs 22.1
company operates through three segments: power, industrial and
General Public 1.7 overseas. The power segment accounted for 77% of net sales in the first
nine months of FY10. The company supplies steam turbines, generators,
boilers and matching auxiliaries up to 800 MW rating (including
Promoter & Institutional holding trend (%)
supercritical sets) through its power segment. In the industrial segment,
Bhel’s diverse client base includes industrial clients (metallurgical, mining,
80.0 67.7 67.7 67.7 67.7 cement, paper, fertilisers and petrochemicals sectors), the Indian Railways
60.0 and power transmission companies. In the overseas segment, the
company supplies its entire product range of power equipment and
(%)
40.0 industrial products.

22.3 21.9 21.8 2 2.1
20.0
Bhel is the preferred supplier of power equipment for government
0.0 projects but its share in the private sector has historically been low. With
Q 1F Y 10 Q 2FY 10 Q 3F Y 10 Q 4F Y 10
an installed production capacity of 15 GW, Bhel enjoys substantial
Promote rs FIIs & MF s economies of scale, with a manufacturing capacity 2.5x its closest
competitor L&T. Due to its dominant industry status (63% share of India’s
installed capacity in FY09), Bhel enjoys high EBITDA margins (16.1% in
FY09 vs. 11.5% for L&T) and high RoE (26.6% in FY09 vs. 24.6% for L&T).
It is largely debt-free, with a debt-to-equity ratio of 0.012 in FY09.
Headquartered in New Delhi, Bhel has staff strength of 45,666 as on

March 31, 2009. The company has 14 manufacturing divisions and eight
service centres spread across India. Majority shareholding in the
company is held by the Government of India (~68% as on December
2009).
Exhibit 2: Company structure
BHEL
Power Industrial Overseas
Exhibit 3: Turnover growth of 27% CAGR in FY05-10 Exhibit 4: Capacity to double in FY08-12E
37,500 34,050 24
20
28,033
30,000
18 15
21,401
(R s cro re)
22,500 18,739
(G W)
14,525 12 10
15,000 10,336 6
7,500 6
0 0
FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 06 FY 08 FY 10E FY 12E
Source: Company, ICICIdirect.com Research Source: Company, ICICIdirect.com Research

Page 2
Exhibit 5: High share of Bhel in India’s installed capacity…. Exhibit 6: …and in the number of generation coal utility sets
160 135 138 60,000

119 125
115
120 45,000
(cro re u n its)
81 86 88
75 77
(G W)
80 30,000
40 15,000
0 0
FY 05 FY 06 FY 07 FY 08 FY 09 FY 05 FY 06 FY 07 FY 08 FY 09
A ll In d ia BHEL A ll In d ia BHEL
Source: Company, ICICIdirect.com Research Source: Company, ICICIdirect.com Research
Exhibit 7: Bhel’s manufacturing units and service centres spread across India
Manufacturing unit
Service centre

Page 3
Investment Rationale
Power generation capacity addition target of 178 GW in XIth and XIIth Plans
Attractive growth opportunities for power equipment Power demand in India, measured by peak load, has grown at 5.4%
manufacturers in India due to the aggressive power CAGR in FY04-09 to 109.8 GW driven by the robust economic growth
generation capacity addition targets set by the (GDP grew at an 8.8% CAGR) and rapid industrial development in the
government for the XIth and XIIth Plans country. However, power supply has lagged demand due to the structural
deficits in the economy and the historic underachievement of power
generation capacity addition targets (50% underachievement over the last
three five year plans). Consequently, peak load deficit in India has been in
the range of 12-16% since the beginning of the last decade.
With the Central Electricity Authority (CEA) forecasting robust growth of

power demand in India (15% CAGR in FY09-FY17E to 331 GW), the
government has set aggressive capacity addition targets for the XIth
(FY07-12) and XIIth (FY07-12) Plans of nearly 178 GW (vs. 21 GW added in
the Xth Plan), providing attractive growth opportunities for power plant
equipment suppliers in India. Aggressive expansion targets have
translated to robust order inflows for power equipment manufacturers,
with the domestic industry leader Bhel enjoying a nearly 54% share in
both the XIth and XIIth Plan ordering to date. Chinese manufacturers, on
the other hand, follow Bhel with a share of 20% in the XIth Plan orders
and 29% in XIIth Plan orders.
Exhibit 8: Power supply in India has been unable to match demand due Exhibit 9: Power demand estimated by CEA to grow at a robust pace
to robust economic growth and structural deficiencies during the XI-XIIIth Plans
120 20.0 600 510

100 500
15.0
80 400 331
(G W)
(G W)
(% )
60 10.0 300 215

40 200
5.0
20 100
0 0.0 0
FY 00 FY 02 FY 04 FY 06 FY 08 XI XII X III
Peak Demand (G W) - L HS Peak s hortage (% ) - RHS
Source: CEA, ICICIdirect.com Research Source: CEA, ICICIdirect.com Research
Exhibit 10: Capacity addition of nearly 278 GW targeted in the XI-XIII Exhibit 11: Total 54% share enjoyed by Bhel in XI and XIIth Plan
Plans to keep pace with rising power demand ordering (to date)
450 413 120
360 311 90
21.1 52.8
270 211 60 16.4
(G W)
7.7
30 13.9
180 132 43.9
25.7
90 0
X I Plan X II Plan
0
X Plan XI Plan X II Plan XIII Plan BHEL C hines e players O ther players Undecided
Source: CEA, ICICIdirect.com Research Source: CEA, ICICIdirect.com Research

Page 4
Bhel’s revenues are estimated to grow at 22% CAGR in Bhel enjoys strong sales visibility over the next 3-4 years…
FY10-12E to Rs 49,873 crore fuelled by Bhel’s large order In the current scenario of power shortage in India, we believe Bhel will be
book (Rs 1,43,800 crore in FY10) and expanded the key beneficiary due to its strong market position (estimated power
manufacturing capacity sector order book size of Rs 120,792 crore in FY10), strong relationship
with government agencies and capacity expansion plans. Bhel enjoys a
54% share in the capacity ordered for the XIth Plan (~80 GW) providing it
strong sales visibility over the next two or three years, with revenues
estimated to grow at 22% CAGR in FY10-12E to Rs 49,873 crore (average
execution period of 3.5 years in FY12E vs. four years in FY09). Topline will
be supported by robust growth expected for the industrial segment (33%
CAGR in FY10-12E to Rs 13,701 crore) fuelled by its large order book (~Rs
15,818 crore in FY10), pick-up of industrial capex in India and initiatives by
Bhel to diversify earnings (transmission & distribution, railways and
nuclear power businesses).
In FY10, Bhel’s gross sales grew 21% YoY to Rs 34,050 crore driven by
the strong performance of the power segment. However, new order
inflows marginally declined by 1% YoY to Rs 59,031 crore contributed by
the lower orders secured from the power segment (down 11% YoY to Rs
41,976 crore).
Exhibit 12: Total revenues to grow at 22% CAGR in FY10-12E to Rs 49,873 crore
60,000
45,000 13,701
9,781
(R s cro re)
30,000 7,753
7,250
6,011 34,580 38,244
15,000 26,866
21,344
15,919
0
FY 08 FY 09 FY 10E FY 11E FY 12E
Pow er & Exports Indus trial
Power order inflows of 29 GW expected to be secured by …but limited scope to grow power segment order book in FY11E-13E
Bhel in FY11E-13E (vs. 48 GW in FY08-10)
We believe limited potential exists for Bhel to grow its power segment
order book during the next two or three years. Of the total target capacity
addition for the XIIth Plan (~100 GW), equipment orders have already
been placed for 47.2 GW capacity, with Bhel capturing a 54% share.
Assuming Bhel captures a 54% share in the remaining XIIth Plan orders,
we estimate new order inflows of 29 GW for the company during FY11E-
13E (vs. 48.1 GW order inflows in FY08-10).

Page 5
Exhibit 13: Limited order inflows likely in FY11E-13E (vs. 47.5 GW in FY08-10)…
Power Segment Order Analysis GW
BHEL's orders inflow - FY08-10E 48.1
Orders remaining - XII Plan 52.8
BHEL's assumed market share 55.0
BHEL's order inflows - FY11E-13E 29.0
Exhibit 14: …consequently, power order inflows to slow down in Exhibit 15: …and total order book to peak in FY11E
FY11E…
175,000
20.0
17.0 16.5 140,000
14.6 13.8
15.0
(R s cro re)
105,000
9.7
(G W)
10.0 7.7 7.6 70,000
35,000
5.0
0
0.0 FY 07 FY 08 FY 09 FY 10E FY 11E FY 12E
FY 07 FY 08 FY 09 FY 10E FY 11E FY 12E FY 13E
Private sector surprises in FY10

Of the nearly 16.5 GW new orders secured by Bhel in FY10, the private
sector accounted for ~14.7 GW. In our view, this is a positive
development given that nearly 50% of the power capacity addition for the
XIIth Plan will come from the private sector (vs. 14% in the XIth Plan).
Historically, Bhel’s market share in the private sector has been low due to
the long execution period associated with the company and intense
JVs with SEBs expected to contribute to order inflows in competition from Chinese players (quicker delivery period and more price
FY11E competitive).
We expect Bhel’s share in the private sector to increase in the XIIth Plan
due to the high share of private sector orders in the XIIth Plan and limited
competition from foreign equipment suppliers in ultra mega power
projects (UMPPs).
Exhibit 16: Strong traction in private sector orders in YTD FY10

Client name Segment Capacity (MW) Value (Rs crore)
Korba West Power Company IPP 600MW 1,475
Ideal Energy Projects IPP 270MW 703
Hindalco Industries CPP 6x150MW 2,008
Adhunik Power and Natural Resources IPP 270 MW 640
Jindal India Thermal Power IPP 2x600MW 2,600
Monnet Power Company IPP 2x525MW 2,630
Jindal Power IPP 4x600 MW 5,040
JP Associates IPP 3x660MW 5,600
Adhunik Power and Natural Resources IPP 270MW 640
Indiabulls IPP 10x270 MW 5,778

Page 6
Well placed to secure supercritical orders

According to the Central Electricity Authority (CEA), nearly 60% of the
power capacity addition for the XIIth Plan will be based on supercritical
technology (vs. 10% share in the XIth Plan) due to its higher efficiency
(and higher PLFs) and lower emission levels. Bhel upgraded its
Well placed to secure large supercritical orders in NTPC- technology to supercritical levels following its technological
DVC bid in H1 FY10 collaborations with Alstom and Siemens and currently has four orders for
supercritical sets worth nearly Rs 22,000 crore.
The company has also entered into joint ventures (JVs) with state
electricity boards (SEBs) for setting up supercritical power plants in
Madhya Pradesh, Maharashtra, Karnataka and Tamil Nadu. Recently, Bhel
secured an order from the Karnataka JV for setting-up a 1,600 MW
(2x800MW) supercritical plant in Yeramarus, Karnataka. We expect Bhel to
finalise orders for supercritical sets from the remaining JVs during FY11E.
Exhibit 17: Supercritical projects of ~ Rs 22,000 crore currently in Bhel’s order book
Client name State Sector Capacity (MW) Value (Rs crore)
Andhra Pradesh Power Development Company Andhra Pradesh Private 2x800MW 2,500
Barh-II, NTPC Bihar Public 2x660MW 7,340
Prayagraj Power Generation Company Limited - JP Associates Uttar Pradesh Private 3x660MW 5,600
Raichur Power Corporation Limited Karnataka Public 2x800MW 6300
Exhibit 18: JVs entered by Bhel with SEBs to secure additional supercritical projects
Date JV Partner Capacity Location
Jan-10 Madhya Pradesh Power Generation Company 2x800MW plant Khandwa, Madhya Pradesh
Aug-09 Maharashtra State Power Generation Company 2x660 MW plant Latur, Maharashtra
Jan-09 Karnataka Power Company 2x660/800MW and 1x660/800MW Yeramarus and Edlapur in Raichur, Karnataka
Nov-08 Tamil Nadu Electricity Board 2x800 MW Tuticorin, Tamil Nadu
Bhel protected from competition in NTPC-DVC bid

In the recently floated bulk equipment tender by NTPC and Damodar
Valley Corporation (DVC), there were only two bidders in the boiler
segment (Bhel and L&T) and five bidders in the turbine segment (Bhel,
L&T-MHI, Bharat Forge-Alstom, JSW-Toshiba and Power Machines).
Chinese and Korean players were left out due to the requirements of an
indigenous domestic manufacturing facility and partnership with a local
player.
The tender is for the supply of 11 turbines and 11 boilers of 660 MW each
(worth Rs 40,000-45,000 crore) to be awarded by July 2010, with Bhel
assured of winning orders for at least five boilers and four turbines (6+5
in case it is the L1 bidder). Nevertheless, we expect strong price
competition in the bidding process, especially from new players as they
will look to establish themselves in the market through this bid.
With Bhel enjoying a strong position in the NTPC-DVC bid and expected
orders from SEBs, we expect the government sector to contribute a
majority of the new orders in FY11E, driving power orders to 13.8 GW (vs.
16.5 GW in FY10). A majority of these are expected to come in H1FY11.
We expect private sector ordering to remain subdued this year as majority
of private sector clients have already placed orders.

Page 7
Exhibit 19: Government sector expected to dominate order inflows in FY11E
We expect increased price competitiveness as L&T plans

O thers
to ramp up production capacity to 6 GW (from 4 GW) and NTPC -DV C
27%
its lower target EBITDA margins of 13% (vs. 18% of Bhel in 24%
FY10)
JV s w ith S EBs
49%
L&T: strongest domestic threat to Bhel at present

With a 20 GW annual target of power capacity addition till FY17,
significant shortfall exists on the supply side. Bhel leads the pack with a
manufacturing capacity of 15 GW by the end of March 2010. Attracted by
the growth opportunities, domestic players have entered into
technological JVs with foreign players, including L&T-Mitsubishi, Bharat
Forge-Alstom, JSW-Toshiba, GB Engineering-Ansaldo, etc. As a result,
domestic manufacturing capacity is expected to rise by ~20 GW over the
next two or three years, led by Bhel (capacity to be raised by a further 5
GW by FY12E).
However, we believe L&T, with an installed production capacity of 4 GW,

is the only serious threat to Bhel among domestic competitors at present,
with the former aggressively bidding for projects against the latter in
recent months. Furthermore, we expect increased price competitiveness
in the future as L&T plans to ramp up production capacity to 6 GW and its
lower target EBITDA margins of 13% (vs. ~18% of Bhel in FY10).
On the other hand, manufacturing capacity of other players is expected to

come on stream after at least three to four years. Furthermore, several
competitors, including Bharat Forge and JSW, do not have any
experience in manufacturing power equipment, thus further reducing the
threat to Bhel. In our view, Bhel is well-positioned to face the increased
competition due to:
Its strong experience of executing power projects for the last 40-45
years; share of 64% in India’s total installed capacity of 138 GW in
FY09
Wide product portfolio covering the entire range of equipment
required to build power plants
Plans to increase installed production capacity to 20 GW by March
2012 (vs. 15 GW in FY10)
Strong service network

Page 8
Exhibit 20: Competitors ramping-up production capacity

Current Capacity (GW) Planned Capacity (GW)
L&T - MHI 4.0 6.0
Bharat Forge - Alstrom - 5.0
JSW - Toshiba - 3.0
GB Engineering - Ansaldo - 2.0
Thermax - Babcock-Wilcox - 3.0
Cethar Vessels - Riley Power - 8.0
BGR Energy - Foster Wheeler - 5.0
Exhibit 21: Power sector orders secured by L&T – YTD FY10

Client Name State Sector Capacity Value (Rs Crore)
Madhya Pradesh Power Generation Company Madhya Pradesh Public 2X600 MW 1635
Maharashtra State Power Generation Company Maharashtra Public 3X660 MW 6897
GMR Energy Andhra Pradesh Private 2X384 MW 2000

Page 9
Significant threat still from low cost Chinese manufacturers

Although Chinese manufacturers are barred from bidding for government
Total 29% share of Chinese players in XIIth Plan
projects and UMPPs, they present a substantial threat to Bhel given their
orders to date
low cost nature (10-15% cheaper than Bhel), superior project
management capabilities (timely deliveries) and nearly 29% share of
private sector ordering to date in the XIIth plan. Furthermore, the
government’s decision to not levy a 14% import duty on Chinese power
equipment imports adds to their competitiveness, in addition to the recent
thumbs-up given by the CEA on quality of Chinese equipment.
Already, large private sector power producers such as Reliance Power,

Adani Power, JSW Energy, Sterlite Energy and Lanco are sourcing power
equipment from Chinese manufacturers as Shanghai Electric, Sichuan
Machinery & Equipment Corporation and Shandong Electric Power
Construction Corporation.
In our view, the prerequisite for private sector power producers to place
low bids for UMPPs made Chinese equipment suppliers the natural
choice. Consequently, Chinese players secured orders for supplying
equipment for the four UMPPs (Mundra in Gujarat, Sasan in Madhya
Pradesh, Krishnapatnam in Andhra Pradesh and Tilaiya in Jharkhand).
However, with the government’s recent decision to bar foreign equipment
manufacturers from supplying equipment for UMPPs, we expect Bhel to
be the primary beneficiary due to expected bidding for new UMPPs
(Cheyyur in Tamil Nadu, Sundergarh in Orissa and Akaltara in
Chhattisgarh) over the next few months.
Exhibit 22: Bhel set to capture significant share of remaining UMPPs

UMPP Capacity Power Producer Equipment Supplier
Sasan in MP 4GW Relaince Power Shanghai Electric
Mundra in Gujarat 4GW Tata Power Toshiba, Doosan
Krishnapattam in AP 4GW Relaince Power Shanghai Electric
Tilaiya in Jharkhand 4GW Relaince Power Shanghai Electric
Sundergarg in Orissa 4GW To be awarded To be awarded
Cheyyur in Tamil Nadu 4GW To be awarded To be awarded
urye in Maharashtra 4GW To be awarded To be awarded
Tadri in Karnataka 4GW To be awarded To be awarded
Akaltara in Chhattisgarh 4GW To be awarded To be awarded
Source: Economic Survey 2010, ICICIdirect.com Research

Page 10
Positive outlook for Industrial segment

Positive outlook for Bhel’s Industrial segment due to pick-
CPP orders lead industrial segment growth in FY10…
up of industrial capex and significant power shortfall in
Given the rising competition in the power plant equipment manufacturing
India
business and limited prospects for growing the power segment order
book in the next two or three years, the management plans to increase
focus on other businesses (transmission, transport, and renewable and
nuclear energy). We estimate revenues of Bhel’s Industrial segment to
grow at 33% CAGR in FY10-12E to Rs 13,701 crore (vs. 14% CAGR in
FY08-10).
With the Indian economy gaining momentum (GDP to grow at 8.5% per
annum in FY11E-12E) and pick-up of industrial capex, we believe Bhel’s
Industrial segment will enjoy strong growth over the next two or three
years. Order inflow grew by 40% YoY to Rs 14,366 crore in FY10 driven
by the metallurgical and petrochemical sectors, especially for building of
CPPs (due to the significant power shortfall in the country). With demand
for cement and steel expected to rise in the backdrop of infrastructure
focused budget and stability of international crude oil prices, we expect
major industrial houses to go ahead with their capacity expansion plans,
fuelling increased demand for CPPs.
Furthermore, the economies associated with captive power production

adds to the appeal of CPPs. Based on our analysis, cost of captive power
is computed at Rs 2,530/MW (vs. Rs 3,450/MW for grid power) assuming a
10 MW captive plant operating at 80% peak load factor (PLF).
Exhibit 23: Economic benefits of CPPs vs. the power grid

Details Assumptions
Plant load Factor (%) 80
Coal required to produce one unit of electricity (1KwH) in Kg 0.54
Cost of coal per tonne 100
Cost of one unit electricity from grid 3.5
Cost of one unit electricity from captive power palnt 2.5
Savings per unit of electricity (in Rs) 0.97
Source: ICICI Direct.com Research, IEX
Exhibit 24: YTD FY10 CPP projects dominate Bhel’s Industrial segment order flows due to significant power shortage in India
Client name Project type Capacity Value (Rs crore)
Hindalco Industries Limited CPP 6x150MW 2,008
Indian Oil Corp. (IOC) CPP 20MW 105
Chennai Petroleum Corporation Limited CPP 20MW 170
Oil India Limited (OIL) CPP 20MW 190
Indian Railways Electric locomotives NA 990
PowerGrid Anti-fog Porcelain Disc Insulators NA 200
Indian Oil Corporation Limited CPP 376MW 3,348
…and large order wins in T&D and transportation businesses YTD FY10
Bhel is already the market leader in the supply of transmission equipment
up to 400 KV and has recently signed a memorandum of understanding
(MoU) to form a JV with Toshiba for the transmission & distribution
business, including manufacturing 765 KV and above category
transmission systems and gas insulated switchgears, for which significant
demand exists in India.
We are positive on the growth prospects of the transportation business,

with Bhel being the leading supplier of traction equipment and electric
locomotives to Indian Railways and to the latter’s capacity enhancement

Page 11
plans. Recently, Bhel secured its largest order to date from Indian
Railways (Rs 990 crore) to manufacture 150 electric locomotives.
Exhibit 25: XI plan targets for installation transmission line (in Ckm)
Transmission Lines XI Plan Target Status March 2009
765 Kv 7850 3118
HVDC +/- 500 Kv 7432 7172
400 Kv 125000 89496
230/220 Kv 150000 122960
Total transmission lines 290282 222746

We expect EBITDA margins to decline to 17% in FY11E (vs.
17.7% in FY10) primarily due to higher commodity prices
and higher import component for supercritical orders Margin expansion a challenge
In our view, Bhel will find it tough to expand margins considering the
increased competition (L&T bidding aggressively for power projects in
recent months) and rising commodity prices. Further, the higher share of
supercritical orders executed by the company (10-20% of operations in
the initial years) is likely to contribute to margin pressures (due to higher
input content). Consequently, we expect Bhel’s EBITDA margins to
decline to 17% in FY11E (estimated at 17.7% in FY10), despite the recent
wage settlement by the company.
Despite the margin pressure, Bhel will continue to enjoy higher EBITDA
margins vis-à-vis domestic and international peers due to the continuance
of its leadership position in the power sector. The management
recognises that being cost competitive is integral for Bhel to maintain its
leadership status, thus focusing on initiatives as design to cost, lean
manufacturing, and purchase and supply management. Supply chain
initiatives include leveraging IT (negotiations through reverse auctions, e-
procurement), long-term rate contracts (steel, copper, transformer oil,
etc), vendor base expansion for BOPs (40 new vendors in FY09 and 38 in
FY10 – up to November 2009), outsourcing (low technology/low core
manufacturing), etc.
Exhibit 26: Bhel will continue to enjoy higher EBITDA margins than peers during FY11E-12E
20.0
15.0
(% )
10.0
5.0
0.0
BHEL L &T Thermax Crompton Dong Fang
G reav es
FY 10 FY 11E FY 12E
Source: Company, Thomson, ICICIdirect.com Research

Page 12
Risks and Concerns

Slow execution rate by Bhel may result in lower new order growth
With Bhel securing several private sector orders in YTDFY10 and strong
backlog of public sector orders, slow project execution by the company
may lead to lower new orders in the future. Historically, Bhel has been
criticised for its slow execution rate owing to its limited manufacturing
capacity and delays caused by its vendors. Consequently, a delay in
capacity expansion (20 GW expected by FY12E) could result in a lower
execution rate, with customers’ preference shifting in favour of private
equipment manufacturers (with better project management capabilities).
Market share loss due to increased domestic competition

Bhel’s dominant position in the domestic market is threatened by the
increasing competition, with domestic players (L&T, JSW, GB
Engineering, Bharat Forge, Thermax, etc.) entering the market in
collaboration with foreign technology partners. As a result, industry
capacity is estimated to increase to 35 GW over the next two or three
years vs. 15 GW by the end of March 2010. With the higher contribution
of the private sector orders in the XIth Plan (~50%), we believe Bhel
could lose market share in an open market scenario.
Deregulation may lead to lower order flows

Although foreign equipment manufacturers are limited from bidding for
government projects (requirement for domestic manufacturing facility and
transfer of technology to local partner), any relaxation of the above norms
may result in increased competition, particularly from China and Korea,
resulting in reduced order flows for Bhel.
Margin contraction due to higher commodity prices

With the economy gaining steam, prices of key commodities (including
steel and crude oil) have increased during the last few months. We expect
commodity prices to continue rising fuelled by the robust demand from
the infrastructure sector and pick-up of industrial activity, which could
result in contraction of Bhel’s margins.
Currency appreciation may lead to preference for imported equipment

Bhel’s competitive position could be adversely impacted by appreciation
of the rupee (availability of imported equipment at a lower price).

Page 13
Provisional Results - FY10

Performance beats management targets comfortably
In FY10, Bhel reported a 21% growth in turnover to Rs 34,050 crore,
beating management guidance comfortably (Rs 32,000 crore). The
performance was on the back of strong growth of turnover in Q4FY10
(+26% to Rs 13,948 crore) fuelled by an enhanced execution capabilities.
PBT and PAT grew by 31% and 37%, respectively. Our ability to further
analyse the performance is constrained by the limited details available in
the provisional results.
For FY11E, the management has announced a normal turnover target of

Rs 38,000 crore (and stretch target of Rs 39,500 crore). We believe the
targets are conservative given Bhel’s large order book and enhanced
execution capabilities. Consequently, we expect Bhel to comfortably beat
its turnover targets in FY11E (+28% vs. 11.6% management target).
Exhibit 27: Solid growth of topline and bottomline in FY10 Exhibit 28: Conservative turnover target for FY11E
Rs Crore FY09 FY10 % change Rs Crore
Turnover 28,033 34,050 21 Turnover 38,000

Gross margin 8,120
PBT 4,849 6,353 31
PBDIT to Total Employment 1.7
PAT 3,138 4,287 37
Gross Margin to Gross Block (%) 92.0
Net Worth 12,939 15,721 22
Gross Profit to Capital Employed (%) 45.7
EPS 64.1 87.6 37
Net Profit to Net Worth (%) 25.6
Capital Investment 1,082 1,767 63 Source: Company, ICICIdirect.com Research

Page 14
Financials
Revenues to grow at a 22% CAGR in FY10-12E
With a total order book size of Rs 1,43,800 crore in FY10 and average
execution period of four years, we estimate Bhel’s revenues will grow at
22% CAGR in FY10-12E to Rs 49,873 crore. We expect revenues of the
power segment to grow strongly in FY10-12E (19% CAGR to Rs 38,244
crore) as Bhel enjoys a 54% share of XI plan power equipment orders.
Growth of this segment will be supported by Bhel’s expanded
manufacturing capacity (15 GW by end of FY10), leading to a faster
execution rate in FY11E-12E (3.5 years vs. four years in FY09). We believe
the power segment will continue to dominate with a 74% share of
revenues in FY12E (vs. 78% in FY10).
Exhibit 29: Total revenues (FY08-12E)
60,000 40
49,873
42,591
45,000 30
33,280
(R s cro re)
26,727
(% )
30,000 20
19,727
15,000 10
0 0
Rev enues - L HS G row th (Y oY ) - RHS
Limited scope to expand margins in FY11E-12E

In the first nine months of FY10, EBITDA margins expanded to 17.5% (vs.
16.1% in FY09) fuelled by lower commodity prices and cost saving
initiatives by the company. For FY11E, we expect EBITDA margins to be
lower at 17% due to higher commodity prices and higher proportion of
supercritical projects executed by Bhel.
In our view, margins will come under pressure despite the recent wage
settlement by the company. The wage settlement, covering all categories
of employees wef January 2007, was finalised in FY10 and the payment
arising were made; provisioning of Rs 1,113 crore in nine months of
FY10.

Page 15
Exhibit 30: Analysis of margins
25.0
21.3
19.4 17.7
16.1 17.0
(% )
17.5 17.0
17.8 16.5 15.8
15.9
14.9
13.8
10.0
EBITDA margin EBIT margin
Return ratios to improve in FY10

Bhel will continue to enjoy high return ratios due to its dominant industry
status. For FY10, we estimate RoCE and RoNW to improve fuelled by the
higher profitability. However, they are likely to decline in FY11E-12E due
to the margin contraction (increased competition, higher share of
supercritical projects, higher raw material costs, etc).
Exhibit 31: RoCE and RoNW
40.0 36.8 36.8

34.7 32.4 34.6
32.0
29.2 29.6 29.7 28.0

24.0 26.5
(% )
16.0
8.0
0.0
RoCE RoNW

Page 16
Valuations
At the CMP of Rs 2500, the stock is trading at a P/E of 22.8x in FY11E and
19.6x in FY12E. We have valued Bhel using the DCF methodology due to
We have valued Bhel using the DCF methodology at Rs the long execution period associated with its projects (~four years). Our
2,733/share due to the long execution period associated valuation is based on assuming an 11.5% WACC and 5% terminal growth.
with its projects (~four years) Despite strong sales visibility over the next two or three years, new order
growth and margins are likely to come under pressure. We are initiating
coverage on the stock with an ADD rating.
Exhibit 32: DCF assumptions

DCF Valuation Table
WACC (%) 11.4
Terminal Growth (%) 5.0
PV of Free Cash Flows (Rs crore) 44,672
Terminal Value of Free Cash Flows (Rs crore) 89,250
Total Value of Free Cash Flows (Rs crore) 133,923
No. of Shares (in crore) 49.0
DCF-derived Price Target 2,733
Implied PE (on FY11E EPS) 25.1
Exhibit 33: P/E Band (1 year forward) – Bhel
4,000
3,200
2,400
(R s)
1,600
800
0
3/31/2004
9/30/2004
3/31/2005
9/30/2005
3/31/2006
9/30/2006
3/31/2007
9/30/2007
3/31/2008
9/30/2008
3/31/2009
9/30/2009
3/31/2010
Price A v erage 26.6x 7.4x

Page 17
Exhibit 34: EV/EBITDA Band (1 year forward) – Bhel
160,000
120,000
(R s cro re)
80,000
40,000
Mar-04
Mar-05
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
S ep-04
S ep-05
S ep-06
S ep-07
S ep-08
S ep-09
Market C ap A v erage 18.8x 7.5x
Exhibit 35: PE – Bhel vs. L&T
80
60
40
(x)
20
0
Jan-04
Jul-04
Jan-05
Jul-05
Jan-06
Jul-06
Jan-07
Jul-07
Jan-08
Jul-08
Jan-09
Jul-09
Jan-10
BHEL L &T
Exhibit 36: Bhel vs. capital goods peers

Market cap Revenue (Rs cr) EBITDA Margin (%) PE (x) EV/EBITDA (x) P/B (x)
(Rs crore) FY11E FY12E FY11E FY12E FY11E FY12E FY11E FY12E FY11E FY12E
BHEL 122,380 42,591 49,873 17.0 17.0 23.0 19.7 15.7 13.4 6.2 5.0
L&T 97,502 51,831 65,003 12.2 12.4 24.1 19.2 16.3 12.8 4.6 3.8
Thermax 8,718 4,305 5,315 14.2 14.2 23.4 18.7 13.7 11.1 6.2 4.8
Crompton Greaves 16,737 10,407 11,924 13.0 13.1 19.2 16.6 12.5 10.8 5.5 4.4
Cummins 10,526 3,573 4,297 16.3 16.6 21.5 17.8 18.0 14.7 5.0 4.4

Page 18
We believe key downside risks emanate from a slower-than-expected

execution rate by Bhel and higher raw material costs. According to our
sensitivity analysis, a 10% lower execution rate will result in an EPS
decline by 8% and 6.1% in FY11E and FY12E, respectively, vis-à-vis our
estimates. Similarly a 100 bps increase in raw materials/sales will result in
an EPS decline by 5.5% each in FY11E and FY12E, respectively.
Exhibit 37: Sensitivity to key assumptions

EBITDA (Rs crore) EPS (Rs)
FY11E FY12E FY11E FY12E
New orders - Power segment
+10% higher than our estimates 7,180 8,512 109.4 129.1
Change (%) 0.5 1.8 0.5 1.9
-10% lower than our estimate 7,108 8,218 108.2 124.3
Change (%) -0.5 -1.8 -0.5 -1.9
Execution rate - Power segment
+10% higher than our estimates 7,677 8,813 117.4 134.0
Change (%) 7.5 5.4 7.9 5.7
-10% lower than our estimate 6,607 7,889 100.1 119.0
Change (%) -7.5 -5.7 -8.0 -6.1
RM/Sales
+100bps higher than our estimates 6,708 7,854 102.8 119.7
Change (%) -6.1 -6.1 -5.5 -5.5
-100bps lower than our estimates 7,580 8,876 114.8 133.7
Change (%) 6.1 6.1 5.5 5.5

Page 19
Exhibit 38: Profit & loss account

(R s cro re)
R s C ro re F Y 08 F Y 09 F Y 10E F Y 11E F Y 12E
To tal R even u es 19,727 26,727 33,280 42,591 49,873
G ro wth (% ) 12.0 35.5 24.5 28.0 17.1
O p . E xp en d itu re 15,986 22,496 27,489 35,447 41,508
E B ITDA 3,741 4,231 5,790 7,144 8,365
G ro wth (% ) 3.7 13.1 36.9 23.4 17.1
D ep reciatio n 297 334 397 480 617
E B IT 3,443 3,897 5,393 6,664 7,748
In terest 35 31 21 22 22
O th er In co m e 1,023 983 981 1,309 1,532
E xtrao rd in ary Item 0 0 0 0 0
PBT 4,430 4,849 6,353 7,951 9,258
G ro wth (% ) 18.6 9.4 31.0 25.1 16.5
Tax 1,571 1,711 2,066 2,624 3,055
R ep . P AT b efo re MI 2,859 3,138 4,287 5,327 6,203
Min o rity In teres t (MI) 0 0 0 0 0
R ep . P AT after MI 2,859 3,138 4,287 5,327 6,203
Ad ju s tm en ts 0 0 0 0 0
Ad j. Net P ro fit 2,859 3,138 4,287 5,327 6,203
G ro wth (% ) 18.4 9.8 36.6 24.3 16.5
Exhibit 39: Balance sheet

E q u ity C ap ital 490 490 490 490 490
R es erves & S u rp lu s 10,285 12,449 15,491 19,406 23,964
S h areh o ld er's F u n d 10,774 12,939 15,981 19,895 24,453
B o rro win g s 95 149 149 149 149
Un s ecu red L o an s 0 0 0 0 0
Deferred Tax L iab ility 0 0 0 0 0
S o u rce o f F u n d s 10,869 13,088 16,130 20,044 24,603
G ro s s B lo ck 4,340 5,099 5,099 6,866 8,866
L es s : Acc. D ep reciatio n 3,343 3,629 4,001 4,456 5,048
Net B lo ck 997 1,470 1,098 2,410 3,818
C ap ital WIP 658 1,157 2,924 3,157 2,757
Net F ixed As s ets 2,934 4,426 5,821 7,366 8,375
In tan g ib le As s ets 43 42 17 -8 -33
In ves tm en ts 8 52 52 52 52
C as h 8,386 10,315 10,765 13,778 17,159
Trad e R eceivab les 11,975 15,976 19,984 25,558 29,907
L o an s & Ad van ces 1,388 2,424 2,992 3,812 4,507
In ven to ry 5,736 7,837 9,270 12,541 14,693
To tal C u rren t As s et 27,906 36,901 43,361 56,040 66,616
C u rren t L iab . & P ro v. 20,022 28,333 33,121 43,405 50,407
Net C u rren t As s et 7,884 8,568 10,240 12,634 16,209
P & L Acco u n t 0 0 0 0 0
Ap p licatio n o f F u n d s 10,869 13,088 16,130 20,044 24,603

Page 20
Exhibit 40: Cash flow statement

Net P ro fit b efo re Tax 4,430 4,849 6,353 7,951 9,258
O th er No n C as h E xp 0 0 0 0 0
D ep reciatio n 297 334 397 480 617
D irect Tax P aid 1,974 2,213 2,066 2,624 3,055
O th er No n C as h In c 117 158 981 1,309 1,532
O th er Item s -1,273 -1,268 21 22 22
C F b efo re ch an g e in WC 1,364 1,544 3,724 4,520 5,310
In c./Dec. In WC -2,110 -3,731 -1,222 619 -195
C F fro m O p eratio n s -746 -2,187 2,503 5,140 5,115
P u r. o f F ix As s ets -664 -1,280 -1,767 -2,000 -1,600
P u r. o f In v 8 -44 0 0 0
C F fro m In ves tin g 367 -370 -786 -691 -68
In c./(Dec.) in Deb t 6 54 0 0 0
In c./(Dec.) in Net Wo rth 245 0 0 0 0
O th ers -909 -1,004 -1,266 -1,435 -1,667
C F fro m F in an cin g -658 -950 -1,266 -1,435 -1,667
O p en in g C as h B alan ce 5,809 8,386 10,315 10,765 13,778
C lo s in g C as h B alan ce 8,386 10,315 10,765 13,778 17,159
Y -o -Y G ro wth (% ) F Y 08 F Y 09 F Y 10E F Y 11E F Y 12E

Net S ales 12.0 35.5 24.5 28.0 17.1
E B ITDA 3.7 13.1 36.9 23.4 17.1
Ad j. Net P ro fit 18.4 9.8 36.6 24.3 16.5
C as h E P S -31.2 20.8 -1.5 24.0 17.5
Net Wo rth 22.6 20.1 23.5 24.5 22.9
Exhibit 41: Key ratios

(% )
F Y 08 F Y 09 F Y 10E F Y 11E F Y 12E
R aw Material 56.9 62.8 59.6 62.9 62.9
E m p lo yee E xp en d itu re 13.5 11.4 16.8 14.6 14.6
O th er E xp en d itu re 8.3 6.7 7.6 7.0 7.0
E ffective Tax R ate 35.5 35.3 32.5 33.0 33.0
P ro fitab ility R atio s (%)

E B ITDA Marg in 19.4 16.1 17.7 17.0 17.0
P AT Marg in 14.8 12.0 13.1 12.7 12.6
P er S h are D ata (R s )
R even u e p er s h are 403.0 546.0 679.8 870.1 1,018.8
E V p er s h are 454.8 454.8 454.8 454.8 454.8
B o o k V alu e 221.3 265.2 327.3 407.3 500.4
C as h p er s h are 171.3 210.7 219.9 281.5 350.5
E PS 58.4 64.1 87.6 108.8 126.7
C as h E P S 80.4 97.1 95.7 118.6 139.3
DPS 15.3 17.0 21.7 24.7 28.7

Page 21

(% )
R etu rn R atio s F Y 08 F Y 09 F Y 10E F Y 11E F Y 12E
R o NW 29.2 26.5 29.6 29.7 28.0
ROCE 34.7 32.4 36.8 36.8 34.6
R O IC 18.3 16.5 18.9 19.5 18.5
F in an cial H ealth R atio
O p eratin g C F (R s C r) -746 -2,187 2,503 5,140 5,115
F C F (R s C r) -604 -2,491 736 3,140 3,515
C ap . E m p . (R s C r) 10,929 13,129 16,171 20,086 24,644
Deb t to E q u ity (x) 0.0 0.0 0.0 0.0 0.0
Deb t to C ap . E m p . (x) 0.0 0.0 0.0 0.0 0.0
In terest C o verag e (x) 97.2 126.9 253.2 297.4 345.8
D eb t to E B ITD A (x) 0.0 0.0 0.0 0.0 0.0
D u P o n t R atio An alysis
P AT/P B T 64.5 64.7 67.5 67.0 67.0
P B T/E B IT 128.7 124.4 117.8 119.3 119.5
E B IT/Net S ales 17.8 14.9 16.5 15.9 15.8
Net S ales /To tal As s et 195.5 218.8 224.0 231.9 220.0
To tal As s et/NW 1.0 1.0 1.0 1.0 1.0

(x tim es )
Wo rkin g C ap ital F Y 08 F Y 09 F Y 10E F Y 11E F Y 12E
Wo rkin g C ap ./S ales (% ) -2.5 -6.5 -1.6 -2.7 -1.9
In ven to ry tu rn o ver 94.1 94.5 95.4 94.9 101.2
Deb to r tu rn o ver 204.1 194.6 200.5 198.2 206.1
C red ito r tu rn o ver 74.5 71.6 71.3 70.8 75.3
C u rren t R atio 1.4 1.3 1.3 1.3 1.3

(R s cro re)
F C F C alcu latio n F Y 08 F Y 09 F Y 10E F Y 11E F Y 12E
E B ITDA 3,741 4,231 5,790 7,144 8,365
L es s : Tax 1,571 1,711 2,066 2,624 3,055
NO P L AT 2,169 2,520 3,724 4,520 5,310
C ap ex -664 -1,280 -1,767 -2,000 -1,600
C h an g e in wo rkin g cap . -2,110 -3,731 -1,222 619 -195
FCF -604 -2,491 736 3,140 3,515

(x tim es )
V alu atio n F Y 08 F Y 09 F Y 10E F Y 11E F Y 12E
P E (x) 42.5 38.7 28.3 22.8 19.6
E V /E B ITDA (x) 29.8 26.3 19.2 15.6 13.3
E V /S ales (x) 5.6 4.2 3.3 2.6 2.2
D ivid en d Y ield (% ) 0.6 0.7 0.9 1.0 1.2
P rice/B V (x) 11.2 9.4 7.6 6.1 5.0

Page 22
RATING RATIONALE
ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com assigns
ratings to its stocks according to their notional target price vs. current market price and then categorises them
as Strong Buy, Buy, Add, Reduce, and Sell. The performance horizon is two years unless specified and the
notional target price is defined as the analysts' valuation for a stock.
Strong Buy: 20% or more;

Buy: Between 10% and 20%;
Add: Up to 10%;
Reduce: Up to -10%
Sell: -10% or more;
Pankaj Pandey Head – Research pankaj.pandey@icicisecurities.com
ICICIdirect.com Research Desk,

ICICI Securities Limited,
7th Floor, Akruti Centre Point,
MIDC Main Road, Marol Naka,
Andheri (East)
Mumbai – 400093
research@icicidirect.com
ANALYST CERTIFICATION
We /I, Chirag Shah PGDBM research analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our personal
views about any and all of the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s)
in this report. Analysts aren't registered as research analysts by FINRA and might not be an associated person of the ICICI Securities Inc.
Disclosures:
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Bharat Heavy Electricals Limited (BHEL) : Sector Stalwart

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Initiating Coverage

April 30, 2010

ICICIdirect.com | Equity Research

Shareholding pattern (Q3FY10) Company Background

40.0 industrial products.

Headquartered in New Delhi, Bhel has staff strength of 45,666 as on

Exhibit 2: Company structure

Power Industrial Overseas

Source: Company, ICICIdirect.com Research

Source: Company, ICICIdirect.com Research Source: Company, ICICIdirect.com Research

ICICIdirect.com | Equity Research

160 135 138 60,000

Source: Company, ICICIdirect.com Research Source: Company, ICICIdirect.com Research

Source: Company, ICICIdirect.com Research

ICICIdirect.com | Equity Research

With the Central Electricity Authority (CEA) forecasting robust growth of

120 20.0 600 510

60 10.0 300 215

Source: CEA, ICICIdirect.com Research Source: CEA, ICICIdirect.com Research

450 413 120

Source: CEA, ICICIdirect.com Research Source: CEA, ICICIdirect.com Research

ICICIdirect.com | Equity Research

Pow er & Exports Indus trial

Source: Company, ICICIdirect.com Research

ICICIdirect.com | Equity Research

Source: Company, ICICIdirect.com Research

10.0 7.7 7.6 70,000

Private sector surprises in FY10

Exhibit 16: Strong traction in private sector orders in YTD FY10

ICICIdirect.com | Equity Research

Well placed to secure supercritical orders

Source: Company, ICICIdirect.com Research

Bhel protected from competition in NTPC-DVC bid

ICICIdirect.com | Equity Research

Exhibit 19: Government sector expected to dominate order inflows in FY11E

We expect increased price competitiveness as L&T plans

Source: Company, ICICIdirect.com Research

L&T: strongest domestic threat to Bhel at present

However, we believe L&T, with an installed production capacity of 4 GW,

On the other hand, manufacturing capacity of other players is expected to

ICICIdirect.com | Equity Research

Exhibit 20: Competitors ramping-up production capacity

Source: Company, ICICIdirect.com Research

Exhibit 21: Power sector orders secured by L&T – YTD FY10

Source: Company, ICICIdirect.com Research

ICICIdirect.com | Equity Research

Significant threat still from low cost Chinese manufacturers

Already, large private sector power producers such as Reliance Power,

Exhibit 22: Bhel set to capture significant share of remaining UMPPs

ICICIdirect.com | Equity Research

Positive outlook for Industrial segment

Furthermore, the economies associated with captive power production

Exhibit 23: Economic benefits of CPPs vs. the power grid

Source: ICICI Direct.com Research, IEX

We are positive on the growth prospects of the transportation business,

ICICIdirect.com | Equity Research

Source: Company, ICICIdirect.com Research