Stock Idea - Areva T&D.

>> Saturday, February 7, 2009

I had given this stock advice earlier on 8th September last year. The stock gave a 20% odd return because of N-Deal (N Deal was passed out) and later went down badly due to volatility in the markets in India and also globally.
More over there was a Split in the Scrip.

Areva T&D Ltd.
CMP: - 189.15
BSE Code: - 522275
Market Cap: - 4522.58
52 Week H/L: - 391.99 - 130.00

Summary: -
Areva T & D India Ltd. is an India-based company engaged in the business of power transmission and distribution. The Company’s products and systems serve to transmit and distribute electricity, as well as operate networks through information management. Areva T & D India Ltd. is present at all stages of the supply power chain, from the generator to the end user, backed by a services portfolio. The Company has a presence in more than 30 countries.

Business: -
Areva has many ‘firsts’ to its credit, thus gaining market leadership in a number of products; The company commissioned India’s first Extra High Voltage substation of 765 kV for NTPC in 2007. It built the largest power generating transformer for Reliance Energy in the same year. It is also a market leader in GIS (Gas Insulated Switchgear) substation. GIS are much more compact as they occupy significantly lesser space compared to AIS (Air Insulted Switchgear). Given the demand for space in the country, the company quickly capitalised on this need especially in urban substations. Areva is also expanding capacities for the high voltage transformers and GIS switchgears to cater to the growing market and retain leadership position.

Expansion: -
Areva plans to double its capacity over the next two years with Rs 700 crore investments in Greenfield projects. The expansion move appears timely as the company, apart from catering to local demand, has also started receiving outsourced orders from its parent.
With this Rs 700 crore investment, these facilities are coming up at Padappai and Hosur in Tamil Nadu and Vadodra in Gujarat by March 2009. With the expansions in place Areva would be able to double its Revenues over the next three years.

N Deal: -
The company already makes nuclear reactors and rotors. Its parent company is a world leader in conventional nuclear projects. It makes turbines for nuclear power stations. It supplies steam turbines to over 30% of nuke power stations globally.

Key Positive -
Areva T& D has an order book that exceeds at least one year of Revenues, thereby provding earnings visibility. The company, even during this slow down has not witnessed any major deferments that could disturb its revenue stream.
The Expansion is a key positive factor.
N Deal has been passed which is one major positive factor for this scrip to benefit.
Good Order Book.
Financials are strong.

Have a long term view on this scrip.

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