Thursday, November 19, 2009

[Investors] “BUY” McNally Bharat bags Rs3 bn order, Order book increases to Rs34 bn


McNally Bharat (MBE) has continued to witness strong traction in incremental order inflows. It has secured a turnkey order for coal handling plant in coke oven battery at Rourkela Steel Plant worth Rs3065 mn. Tenure of the project is 24 months.

MBE is best placed among peers in terms of order traction and visibility

n    With the above order, McNally Bharat has bagged orders worth Rs17.5 bn YTD.

n    The consolidated order book has increased to a robust Rs34 bn. This is equivalent to 3.1X FY09 consolidated revenues - lending clear earning visibility for the next 2 years.

n     At H1FY10 end, management had indicated robust order bid pipeline at Rs49 bn including L1 orders worth Rs8.6 bn.

We have remained positively biased towards MBE since Q4FY09 and it has remained our top pick in the engineering and capital goods space. We maintain a positive outlook on the material handling equipment industry and expect MBE to be a primary beneficiary of the ensuing opportunity. We continue to maintain a positive bias on McNally Bharat in view of (1) strong order bid pipeline and robust order inflows momentum (2) management confidence in execution on existing order backlog. At CMP of Rs210, the stock is trading at 11.9X FY10E and 9.0X FY11E consolidated earnings of Rs17.7 and Rs23.4 per share respectively. We have a "BUY" rating on the stock.

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