Good opportunity to ‘Buy’ BGR Energy: HDFC Sec

MUMBAI: HDFC Securities has maintained ‘Buy’ recommendation on BGR Energy after the stock plunged following CBI investigation in bribe-for-loan issue that hit the stock market. The brokerage has set a target price of Rs 950 on the stock.

“BGR Energy is down 21% over the past week on account of a) an investigation by the CBI into loans given by Bank of India (BOI) to BGR Energy and b) potential liquidated damages (LD) which may need to be paid by BGR Energy to AP Genco for delays in construction.

The management has clarified that the loans were given with IDBI as the lead syndicator for the consortium and BOI as one of the members and there were no unethical practices involved.

On the second point, BGR Energy has clarified that they are not required to pay any LD for these plants and money’s will be received by BGR Energy by year end. Lastly, the promoters have not pledged any shares of the company.

BGR Energy remains our top pick in the power equipment space on account of its strong execution skills and its unique position to provide the BTG, BOP and EPC for power plant. The current drop in price is a good buying opportunity and we maintain our BUY rating and target price of Rs 950,” the report said.