Dec
23BGR Energy 101
Filed Under (Stock Observations) by Deepak Singh on 23-12-2009
Do you know a listed company by the name - BGR Energy and Systems. Is it a Utility company? Well here’s chart and some facts about the company.
About BGR Energy
- The company manufactures equipments and executes Engineering Procurement and construction (EPC) contracts in the Power sector. It has a market cap of 3480 crores.
- The stock is a great play on Power capacity additions. Remember, Power companies have raised lot of resources in last six months and hence business environment for the company seems bright going forward.
- The company got listed on the stock exchanges after its IPO in Jan 2008. It made a high of 989 in Jan 2008
- Leadership position in executing Balance of Plant contracts.
- Two factors that can drive up the valuation/PE: i. Strong Order Inflows [Current order book is 4.5x FY10 sales]; and ii. Successful execution of large projects. [Appointment of ex-CMD of NTPC as MD may help execution]
- The company is expected to post an EPS of Rs. 33 in FY11 [100% growth over FY09 EPS]. At CMP of Rs. 477, the company is trading at 14.5 times FY11 earnings, which is attractive considering the business opportunity. One can expect an upside of 40% over next 12 months. [Assuming PE of 20]
BGR Energy stock Weekly Chart
Capital Goods has been laggard in last 3 months; and seems set for out performance over next one year. BGR Energy may benefit from that trend. As you can see in the chart below, stock has been consolidating in 440-520 band now for more than 4 months; and hence any breakout will set the stock for much higher targets.
Source: ChartAlert [www.chartalert.com]
One can look to buy this stock on declines. The level of 450 should act as strong support for the stock. The momentum will come only above 520.
Considering all the above, it is a stock to keep an eye on. As always, please note the above stock is not a trading recommendation. I hope you found the article useful
Disclaimer - The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers
Search State of the Market Blog -
Deepak,
its a company that a sensible invester should ignore.
this is my personal opinion.
shirish
Where do you look at the fy11 earnings, i mean future growth of the company? I was not able to find it in bseindia.
Since I have my friends there in this company - I wish to share some info.
It is a company run by politicians( under binami).
Recently one of the MW project got failed. Earlier the 1st project succesfully completed had been under quoted & incurred loss for the same.
I rely on research reports to look at future growth earnings.