Monday, August 24, 2009

[Investors Please Listen] L&T bags Rs10 bn orders for Electrical Projects, At CMP the stock is trading at rich valuations of 26.3X FY10E and 21.9X FY11E consolidated earnings of Rs58.9 and Rs70.8 per share respectively. We have a negative bias on the stock.

L&T has bagged orders worth Rs10.4 bn in the Gulf region for construction of electrical substations largely from government / quasi-government customers.

-   It has secured an order worth Rs7.4 bn (USD 153.45 mn) from Qatar Petroleum. The order entails construction of 4 substations, 132kV cabling, 33kV & 11kV power distribution including telecom network development for Ras Laffan Industrial City. Tenure of the project is 32 months.

-   L&T bagged another order worth Rs960 mn (USD 20 mn) from KAHRAMAA for construction of a 66kV gas insulated substations (GIS) at Education City, Doha.

-   L&T also bagged an order from Dubai Electricity & Water Authority for Rs1150 mn (USD 24 mn) for construction of a 132/11kV GIS at Dubai.

-   L&T's JV (L&T Oman) secured an order for Rs960 mn (USD 20 mn) from Oman Electricity Transmission Company for construction of 132/33kV GIS at Nakhal Area, Oman.

With the above orders, L&T has bagged orders worth Rs159 bn YTD (H1FY09 order intake - Rs247 bn) – equivalent to 27% of our FY10E order inflow estimates. We reiterate that achieving management order inflow guidance of 25-30% in FY10E will be herculean task and expect order inflow growth at a lower 15%. L&T's total order book stands at Rs780 bn. At CMP the stock is trading at rich valuations of 26.3X FY10E and 21.9X FY11E consolidated earnings of Rs58.9 and Rs70.8 per share respectively. We have a negative bias on the stock.
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