Emkay for subscribing BGR Energy IPO for long term
Emkay Share and Stock Brokers has recommended subscribing the issue of BGR Energy Systems with a long term view.
By INDIATIMES NEWS NETWORK |
MUMBAI: Emkay Share and Stock Brokers has recommended subscribing the issue of BGR Energy Systems with a long term view. At the upper end of the price band (Rs 480 per share), BGR Energy would quote at 21 times FY2009 estimated earnings and 11.3 times FY2009 estimate EBIDTA.
These valuations, even though not significantly cheap, are reasonable given BGR’s staggering 100 per cent plus earnings CAGR over 2007-09 estimates and ensuing earnings visibility on the back of strong order flow. The same has been supported by management upbeat stance on the BOP space and aggressive guidance of Rs 200 billion order flow.
Emkay believes that even though the issue does not provide significant listing gains, it could be a good long term growth story given the huge opportunity in the lucrative BOP space.
The company entered into the power projects business in 2000 and has completed three projects of 130 million watt till date. Rise in material costs and fixed price nature of contracts could squeeze BGR's margins.
BGR Energy will be issuing 91,36,000 shares of Rs 10 each constituting 12.7 per cent of the post issue paid-up capital. The issue comprises fresh issue of 43,20,000 shares. The net issue to public will be of 86,36,000 shares and 5,00,000 shares have been reserved for employees.
The price band for the issue is Rs 425-480 per share, and size of the issue works out to Rs 3.9-4.4 billion. The company has already placed 28.80 lakh shares with various investment trusts and the promoters have transferred 14.40 lakh shares to Reliance Capital Trustee at Rs 450 per share. Post IPO, the promoter holding will stand at 81.31per cent.
These valuations, even though not significantly cheap, are reasonable given BGR’s staggering 100 per cent plus earnings CAGR over 2007-09 estimates and ensuing earnings visibility on the back of strong order flow. The same has been supported by management upbeat stance on the BOP space and aggressive guidance of Rs 200 billion order flow.
Emkay believes that even though the issue does not provide significant listing gains, it could be a good long term growth story given the huge opportunity in the lucrative BOP space.
The company entered into the power projects business in 2000 and has completed three projects of 130 million watt till date. Rise in material costs and fixed price nature of contracts could squeeze BGR's margins.
BGR Energy will be issuing 91,36,000 shares of Rs 10 each constituting 12.7 per cent of the post issue paid-up capital. The issue comprises fresh issue of 43,20,000 shares. The net issue to public will be of 86,36,000 shares and 5,00,000 shares have been reserved for employees.
The price band for the issue is Rs 425-480 per share, and size of the issue works out to Rs 3.9-4.4 billion. The company has already placed 28.80 lakh shares with various investment trusts and the promoters have transferred 14.40 lakh shares to Reliance Capital Trustee at Rs 450 per share. Post IPO, the promoter holding will stand at 81.31per cent.
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