refer to important disclosures at the end of this …vid.investmentguruindia.com › report › 2020...

Emkay Research is also available on www.emkayglobal.com and Bloomberg EMKAY<GO>. Please refer to the last page of the report on Restrictions on Distribution. In Singapore, this research report or research analyses may only be distributed to Institutional Investors, Expert Investors or Accredited Investors as defined in the Securities and Futures Act, Chapter 289 of Singapore.

India Equity Research | Engineering & Capital Goods

May 12, 2020

Sector Update

Engineering & Capital Goods Refer to important disclosures at the end of this report

Apr-20: Tendering activity surprises

positively but actual awards dip further

This report is solely produced by Emkay Global. The following person(s) are responsible for the production of the recommendation:

Amar Kedia [email protected] +91 22 6624 2466

This report is a monthly update on project tendering and awarding activity in the

Infrastructure space – we assess the trends seen in April’20.

Key trends seen in April’20

Covid-19-related disruptions marred awarding activity as it fell 70% yoy in April 2020, with sharp

declines in Railways (down 44% yoy), Real Estate (down 97% yoy), Pipeline (down 81% yoy) and

Others segment (down 100% yoy). Power Equipment (up 70% yoy) and Roadways (up 49% yoy)

were the only segments that reported growth. Railways and Refineries witnessed orders worth

Rs18bn and Rs21.5bn, respectively, to L&T during the month, which we have excluded for

comparison purpose (past year’s numbers have also been adjusted for L&T order data).

The total value of tenders published in April 2020 jumped 241% yoy and 30% mom due to a low base

effect on account of ordering slowdown prior to general elections in May 2019. Tendering activity was

driven by a sharp pick-up in sectors such as Roadways (up 188% yoy), Irrigation (up 469% yoy),

Water Supply (up 2,390% yoy), Real Estate (up 722% yoy) and Water Treatment (up 1,361% yoy).

Sectors such as Community Services (down 56% yoy) and Railways (down 82% yoy) reported

declines.

Major orders finalized in April’20 include: 1) a contract worth Rs17.5bn won by Vikram Solar from

NTPC to build a 300MW solar project located in Rajasthan; 2) a contract worth Rs17.3bn won by Tata

Power Solar Systems from NTPC to build a 300MW solar project; and 3) a contract worth Rs5.9bn

won by G R Infraprojects for the construction of an elevated viaduct and 3 elevated stations of Delhi-

Gurgaon-Satnaur Badesron RRTS corridor.

With the fiscal situation of both the Centre and State governments already worsening and further

pressure likely due to the Covid-19 impact, we are now increasingly cautious on FY21 order inflows

for our coverage stocks.

Top picks from Emkay coverage

L&T: Despite worrying near-term outlook, we believe that the long-term outlook for L&T remains

promising on strong balance sheet and technical competence across segments. Past track record

suggests that L&T often gains market share in a difficult macro environment as weaker players

collapse.

Cummins India: We are structurally positive on domestic Powergen and Industrial segments, backed

by the underpenetrated power back-up market, demand visibility from metro projects, airports and

data centers.

KNR Constructions and PNC Infratech: KNR and PNC are among the few construction companies

that have maintained an asset-light approach and yet a focused strategy to bid for projects in their

geographical focus areas, thereby generating consistent OCF/FCF.

Please see our sector model portfolio (Emkay Alpha Portfolio): Engineering & Capital Goods (3)

Financial Snapshot

EPS (Rs) EV/EBITDA P/E

FY20E FY21E FY20E FY21E FY20E FY21E

ABB 17.0 18.3 30.3 28.9 50.7 47.1

BHEL 0.9 1.5 2.4 0.2 26.0 15.2

Cummins India 24.0 21.1 13.7 14.6 15.4 17.5

GE T&D India (3.3) (0.1) 96.7 16.5 NM NM

Kalpataru Power 33.7 29.5 4.6 4.7 5.9 6.8

KEC International 22.9 18.3 5.0 5.4 8.6 10.8

Larsen & Toubro 65.7 60.9 14.2 14.3 12.5 13.5

Siemens 30.5 31.7 21.5 22.4 33.7 32.5

Thermax 23.2 24.0 14.7 15.5 30.6 29.6

Triveni Turbine 4.3 3.7 10.9 11.4 14.8 17.0

Source: Company, Emkay Research

http://www.emkayglobal.com/

Engineering & Capital Goods India Equity Research | Sector Update


May 12, 2020 | 2

Story in Charts

Exhibit 1: On a mom basis, total tenders published grew 30% in value terms in April’20…

Source: Projects Today, Emkay Research

Exhibit 2: … and the number of tenders published for the month fell 57% mom in April’20


Exhibit 3: On a yoy basis, the value of published tenders surged 241% on a very low base ...


Exhibit 4: …and increased 6% yoy in terms of number of tenders


Exhibit 5: The value of orders announced fell 67% mom…


Exhibit 6: …and the number of orders fell 28% mom


Exhibit 7: The value of orders announced decreased 70% yoy


Exhibit 8: In number terms, orders announced grew 55% yoy


-100

-50

0

50

100

150

0

400

800

1,200

1,600

Apr-18 Aug-18 Dec-18 Apr-19 Aug-19 Dec-19 Apr-20

%Rs bn

Value of Tenders Growth MoM (RHS)

-100

-50

0

50

100

150

0

1,000

2,000

3,000

4,000


%

No. of Tenders

No Of Tenders Growth MoM (RHS)

-100

-50

0

50

100


%Growth YoY

-90

-60

-30

0

30

60


% Growth YoY

-100

0

100

200

300

400

-

200

400

600

800


In % TermsRs bn

Value of contracts Growth Rate MoM (RHS)

-100

-60

-20

20

60

0

200

400

600

800


%No. of

Awards

No Of Contracts Growth Rate MoM (RHS)

-100.0

0.0

100.0

200.0

300.0


YoY Growth %

-120.0

-80.0

-40.0

0.0

40.0

80.0


YoY Growth %




May 12, 2020 | 3

Analysis of April’20 tendering and awarding activity

Tendering activity in April’20 shows a marked improvement yoy albeit on a low base

Tendering activity in April’20 surged 241% yoy and 30% mom and was a positive surprise

given the disruptions in the economy on account of Covid-19.

However, with the fiscal situation of both the Centre and State governments already under

pressure and further worsening likely due to Covid-19, we believe that tendering and

awarding activity will remain subdued for FY21.

Key tenders published during the month were: 1) Lifting of 1.1bn cubic feet of water per

day (361 cumecs) from foreshore of SYP to Devikonda reservoir at Velgatoor village; 2)

Lifting of 333 cumecs of water from Ananthagiri reservoir to delivery Cistern at

Chinnagundavally village; and 3) Lifting of 1.1 TMC of water per day (361 cumecs) from

foreshore of Devikonda reservoir to FFC at Namapur village.

Exhibit 9: On a mom basis, total tenders published grew 30% in value terms in April’20…


Exhibit 10: … and the number of tenders published for the month fell 57% mom in April’20


Exhibit 11: On a yoy basis, the value of published tenders surged 241%...


Exhibit 12: …but increased 6% yoy in terms of number of tenders


-100

-50

0

50

100

150

0

400

800

1,200

1,600


%Rs bn

Value of Tenders Growth MoM (RHS)

-100

-50

0

50

100

150

0

1,000

2,000

3,000

4,000


%

No. of Tenders

No Of Tenders Growth MoM (RHS)

-100

-50

0

50

100


%Growth YoY

-90

-60

-30

0

30

60


% Growth YoY




May 12, 2020 | 4

Sector-wise breakdown of tenders

In April’20, sectors which reported strong growth in the tendering activity were Roadways (up

188% yoy), Irrigation (up 469% yoy), Water Supply (up 2,390% yoy), Real Estate (up 722% yoy)

and Water Treatment (up 1,361% yoy. In contrast, Community Services (down 56% yoy) and

Railways (down 82% yoy) were the sectors which reported declines.

Cumulatively, for TTM April’20, tendering activity saw a decline of 35%, mainly due to the fall in

major sectors such as Roadways, Irrigation, Community Services, Real Estate, Power

Distribution and Water Supply. Railways, Hospitals and Water Treatment were the sectors to

report growth in tendering activity.

Exhibit 13: Sector-wise details of tenders opened in April’20 in value terms

In Rs bn Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 % YoY TTM

Apr’19 TTM

Apr’20 % YoY

Roadways 24 131 102 64 162 154 84 232 291 276 156 68 69 188 3,231 1,790 (45)

Irrigation 46 39 9 21 113 73 34 47 78 19 24 29 260 469 904 746 (17)

Railways 70 64 54 39 47 30 87 27 78 64 113 18 13 (82) 605 633 5

Community Services 12 32 22 25 40 34 25 25 20 53 63 45 5 (56) 858 390 (55)

Water Supply 4 30 20 15 64 120 22 18 8 46 71 129 100 2,390 813 643 (21)

Real Estate 9 8 29 39 15 12 17 52 44 30 39 44 78 722 751 407 (46)

Power Distribution 2 7 5 13 16 5 14 21 9 36 6 11 10 540 333 151 (55)

Hospitals 0 2 28 14 20 57 4 24 29 27 26 18 1 219 241 251 4

Water Treatment 1 5 3 3 2 8 2 1 2 5 11 63 14 1,361 104 121 16

Total 176 330 288 262 547 518 314 471 576 659 557 465 603 241 8,590 5,589 (35)

Growth YoY (%) (66) (38) (56) (64) 4 (18) (62) (2) (36) (37) (54) (48) 241


Exhibit 14: Sector-wise details of tenders opened in April’20 in number terms

In Numbers Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 % YoY TTM

Apr’19 TTM

Apr’20 % YoY

Roadways 197 334 419 423 353 380 296 413 377 991 533 400 212 8 11,306 5,131 (55)

Irrigation 17 79 85 62 59 88 43 84 77 174 208 162 76 347 2,191 1,197 (45)

Railways 244 289 209 163 124 121 119 135 106 113 92 57 45 (82) 1,882 1,573 (16)

Community Services 79 269 262 206 293 227 206 243 160 553 671 439 95 20 4,228 3,624 (14)

Water Supply 30 107 193 106 114 118 107 127 92 265 237 220 93 210 4,811 1,779 (63)

Real Estate 29 52 69 64 73 78 69 105 36 118 135 99 58 100 1,366 956 (30)

Power Distribution 38 111 119 141 160 88 109 150 102 154 85 112 42 11 2,250 1,373 (39)

Hospitals 3 29 28 41 42 41 64 84 39 66 148 60 23 667 951 665 (30)

Water Treatment 14 38 48 42 41 34 28 32 36 51 58 38 13 (7) 707 459 (35)

Total 762 1,510 1,685 1,485 1,514 1,422 1,238 1,592 1,213 2,792 2,545 1,885 808 6 33,773 19,689 (42)

Growth YoY (%) (72) (49) (51) (54) (51) (53) (57) (50) (64) (8) (15) 4 6





May 12, 2020 | 5

Exhibit 15: Breakdown of the number of tenders in Mar’19


Exhibit 16: Breakdown of the number of tenders in April’20


Exhibit 17: Roadways – the value of tenders grew 188% yoy and 2% mom


Exhibit 18: Roadways – the number of tenders grew 8% yoy but fell 47% mom


Exhibit 19: Railways – the value of tenders fell 82% yoy and 28% mom


Exhibit 20: Railways – the number of tenders decreased 82% yoy and 21% mom


Exhibit 21: Real Estate – the value of tenders surged 722% yoy and 77% mom


Exhibit 22: Real Estate – the number of tenders grew 100% yoy but fell 41% mom


Roadways30%

Irrigation3%

Railways38%

Community Services

12%

Water Supply

5%

Real Estate4%

Power Distribution

6%Hospitals

0%

Water Treatment

2%

Roadways32%

Irrigation12%

Railways7%

Community Services

14%

Water Supply14%

Real Estate9%

Power Distribution

6%Hospitals4%

Water Treatment

2%

-100

-50

0

50

100

150

200

250

0

250

500

750

1,000


%

Rs bn

Roadways Growth YoY (RHS)

-100

-25

50

125

200

0

300

600

900

1200

1500


%No. of Tenders

Roadways Growth YoY (RHS)

-100

-50

0

50

100

150

200

0

40

80

120


%

Rs bn

Railways Growth YoY (RHS)

-100

-50

0

50

100

150

200

250

0

50

100

150

200

250

300

350


%No. of Tenders

Railways Growth YoY (RHS)

-100

300

700

1100

0

50

100

150

200

250


%

Rs bn

Real Estate Growth YoY (RHS)

-100

-25

50

125

200

0

100

200


%No. of Tenders

Real Estate Growth YoY (RHS)




May 12, 2020 | 6

Exhibit 23: Irrigation – the value of tenders jumped 469% yoy and 785% mom


Exhibit 24: Irrigation – the number of tenders grew 347% yoy but fell 53% mom


Exhibit 25: Water Supply – the value of tenders surged 2,390% yoy but fell 22% mom


Exhibit 26: Water Supply – the number of tenders increased 210% yoy but fell 58% mom


Exhibit 27: Water Treatment – the value of tenders grew 1,361% yoy but fell 77% mom


Exhibit 28: Water Treatment – the number of tenders fell 7% yoy and 66% mom


Exhibit 29: Power Distribution – the value of tenders grew 540% yoy but fell 12% mom


Exhibit 30: Power Distribution – the number of tenders grew 11% yoy and 63% mom


-100

0

100

200

300

400

500

0

50

100

150

200

250

300


%

Rs bn

Irrigation Growth YoY (RHS)

-100

-25

50

125

200

275

350

425

0

50

100

150

200

250

300


%No. of Tenders

Irrigation Growth YoY (RHS)

-500

0

500

1000

1500

2000

2500

3000

0

40

80

120

160


%Rs bn

Water & Sewerage Pipeline & Distribution Growth YoY (RHS)

-100

0

100

200

300

0

250

500

750

1,000


%

No. of Tenders

Water & Sewerage Pipeline & Distribution Growth YoY (RHS)

-150

250

650

1050

1450

0

20

40

60

80


%

Rs bn

Water, Sewage & Effluent Treatment Growth YoY (RHS)

-100

-50

0

50

100

0

25

50

75

100


%No. of Tenders

Water, Sewage & Effluent Treatment Growth YoY (RHS)

-100

0

100

200

300

400

500

600

0

20

40

60


%Rs bn

Power Distribution Growth YoY (RHS)

-100

-25

50

125

200

0

100

200

300

400

500


%No. of Tenders

Power Distribution Growth YoY (RHS)




May 12, 2020 | 7

Exhibit 31: Major tenders published in April’20

Issuer Name Value

(Rs bn) Industry Scope of Work

Completion (Months)

Irrigation & CAD Department, Telangana

62 Irrigation Lifting of 1.1 thousand million cubic feet (TMC) of water per day (361 cumecs) from foreshore of SYP to Devikonda reservoir at Velgatoor village

24


61 Irrigation Lifting of 333 cumecs of water from Ananthagiri reservoir to delivery Cistern at Chinnagundavally village

0


33 Irrigation Lifting of 333 cumecs of water from Mid Manair Reservoir to Ananthagiri Reservoir at Kaleshwaram Project

24


31 Irrigation Additional 1.1 TMC-drawl and lifting of 1.1 TMC of water per day (361 cumecs) from foreshore of Devikonda reservoir to FFC at km 95 at Namapur village

24


26 Irrigation Construction of barrage with radial gate, hoisting arrangements across Godavari River downstream of existing Dummugudem anicut near Ammagaripalli village

24

Central Coalfields Ltd. 20 Coal Development & operationalization of kotre basantpur pachmo ocp for 25 years in mdo mode at West Bokaro Coalfileds

0


16 Irrigation Lifting of 333 cumecs of water from forebay at Tukkapur to Sri Komuravelli Mallanna Sagar for Kaleshwaram project parallel conveyor system

24

NBCC (India) Ltd. 14 Real Estate Construction/ rectification of balance works/ left out works of Dream Valley, Phase-2 at Plot No. GH-09, Tech Zone-IV in Greater Noida.

36

NBCC (India) Ltd. 11 Real Estate Construction/rectification of balance works/ left out works of Leisure Valley-Verona Height at Plot No. GH-02, Tech Zone-IV, Greater Noida.

36

National Highways Authority of India

9 Roadways Construction of 4 lane expressway from start of DSIR Zone of Ahmedabad district to Adhelai Village of Bhavnagar district

24


9 Roadways Construction of four lane expressway from Sindhrej Village to Vejalka Village from km 22 to 48 of Ahmedabad-Dholera Greenfield Alignment (NH-751)

24


8 Roadways Construction of four lane expressway from Sardar Patel Ring Road to Sindhrej Village from km 0 to km 22 of Ahmedabad-Dholera Greenfield Alignment (NH-751).

24

Municipal Corpn. of Greater Mumbai

8 Water, Sewage & Effluent Treatment

Designing, providing, constructing and commissioning modernized & fully automated package/ modular sewage treatment plant along Poisar River in Mumbai Suburban.

36


7 Roadways Construction of four lane expressway from Vejalka Village to Start of DSIR Zone from km 48 to 71 of Ahmedabad-Dholera Greenfield Alignment

24

Transmission Corpn. of Telangana Ltd.

7 Power Distribution Supply, erection, testing and commissioning of 400/220/132kV Choutuppal substation.

18

NBCC (India) Ltd. 7 Real Estate Construction/rectification of balance works/left out works of Centurian Park -Terrace Home & Tropical Garden at Plot No. in GH-05, Tech Zone-IV, Greater Noida West.

36

Uttar Pradesh State Water & Sanitation Mission

7 Water & Sewerage Pipeline & Distribution

Construction of pipe water supply for Jhilo and Bijpur group of villages in Sonbhadra district.

24


7 Irrigation Excavation of Gravity Canal from km 0 to 15 to carry 333 cumecs discharge of water at Chinnagundevelly village to Fore Bay

24

Public Works Department, Tamil Nadu

7 Roadways Initial rectification widening, strengthening, improvements in state highways & major district roads for Length of 371 km in Kumbakonam, Thiruvidaimaruthur.

0

NBCC (India) Ltd. 6 Real Estate Construction/ rectification of balance works/left out works of Golf Homes on as is where basis at Plot No - 02, Sector-4, Greater Noida.

36





May 12, 2020 | 8

Awarding activity dips further on Covid-19-related disruptions

The awarding activity in April’20, in value terms, declined 70% yoy, while the number of

orders in April’20 grew 55% yoy.

Major orders finalized in April'20 include: 1) a contract worth Rs17.5bn won by Vikram Solar

from NTPC to build a 300MW solar project located in Rajasthan; 2) a contract worth

Rs17.3bn won by Tata Power Solar Systems from NTPC to build a 300MW solar project;

and 3) a contract worth Rs5.9bn won by G R Infraprojects for the construction of elevated

viaduct from IDPL Complex to Rajiv Chowk & 3 elevated stations viz. Udyog Vihar, Sector-

17 and Rajiv Chowk of Delhi- Gurgaon-Satnaur Badesron RRTS corridor.

For yoy comparison, we have adjusted the awarding data (in value terms) for FY19 for

exclusion of orders awarded to L&T as it has stopped reporting it from April’19.

Exhibit 32: The value of orders announced fell 67% mom…


Exhibit 33: …and the number of orders fell 28% mom


Exhibit 34: The value of orders announced decreased 70% yoy


Exhibit 35: In number terms, orders announced grew 55% yoy


-100

0

100

200

300

400

-

200

400

600

800


In % TermsRs bn

Value of contracts Growth Rate MoM (RHS)

-100

-60

-20

20

60

0

200

400

600

800


%No. of

Awards

No Of Contracts Growth Rate MoM (RHS)

-100.0

0.0

100.0

200.0

300.0


YoY Growth %

-120.0

-80.0

-40.0

0.0

40.0

80.0


YoY Growth %




May 12, 2020 | 9

Sector-wise award breakdown

TTM April’20 order finalization declined 44% and was spread across all major sectors,

except for Pipeline (up 32% yoy) and Power Equipment (up 53% yoy).

For April’20, sectors which reported steep declines were Railways (down 44% yoy), Real

Estate (down 97% yoy), Pipeline (down 81% yoy) and other segments (down 66% yoy). In

contrast, Roadways (up 49% yoy) and Power Equipment (up 70% yoy) reported robust

growth during the month.

Exhibit 36: Sector-wise details of project awards

In Rs bn Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 % YoY TTM Apr’19 TTM Apr’20 % YoY

Roadways 4 3 9 8 25 17 28 128 12 11 31 84 5 49 1,112 363 (67)

Power Distribution 2 2 0 0 8 10 4 9 12 5 2 2 0 (100) 175 53 (70)

Power Equipment 24 0 35 22 25 21 72 23 61 31 11 29 40 70 242 371 53

Railways 11 13 5 12 31 35 12 73 20 25 19 7 6 (44) 375 259 (31)

Real Estate 8 10 17 8 8 72 15 18 4 17 23 10 0 (97) 301 202 (33)

Process 3 1 3 3 3 1 3 4 7 5 4 2 3 (0) 60 39 (34)

Pipeline 4 2 21 0 2 - 3 1 3 1 0 6 1 (81) 31 41 32

Infrastructure 0 2 0 - 1 - 3 0 10 0 7 6 - (100) 84 29 (65)

Water Supply - 1 17 13 1 3 3 12 6 6 4 14 2 NA 130 81 (38)

Irrigation - 0 78 9 11 11 8 1 3 1 35 7 0 NA 183 163 (11)

Mining - - - 3 - - - 0 0 - - - - NA - 4 NA

Others 134 6 18 4 40 58 13 12 16 15 5 6 0 (100) 535 193 (64)

Total 189 41 203 92 155 230 166 281 153 117 142 172 58 (69) 3,229 1,810 (44)

Growth YoY (%) (45) (84) (44) (76) (60) 53 (55) 3 (37) (45) (15) (26) (69)


Exhibit 37: Project awards in Mar’19


Exhibit 38: Project awards in April’20


Exhibit 39: Roadways – order finalization was up 49% yoy but fell 94% mom


Exhibit 40: Railways – order finalization was down 44% yoy and 8% mom


Roadways2%

Power Distribution

1%Power

Equipment12%

Railways6%

Real Estate4%

Process2%

Infrastructure…

Water0%Irrigation

0%

Others71%

Roadways9%

Power Equipment

69%

Railways11%

Real Estate0%

Process5%

Water4%Irrigation

0%

Mining0%

Others1%

-100

100

300

500

0

100

200

300

400

500


%Rs bn

Roadways YoY - Growth (RHS)

-150

200

550

900

1250

0

20

40

60

80


%Rs bn

Railways YoY - Growth (RHS)




May 12, 2020| 10

Exhibit 41: Water supply – order finalization was down 85% mom


Exhibit 42: Irrigation – order finalization fell 99% mom


Exhibit 43: Real Estate – order finalization fell 97% yoy and 98% mom


Exhibit 44: Process – order finalization was flat yoy but grew 28% mom


Exhibit 45: Power Distribution – order finalization fell almost 100% both yoy and mom


Exhibit 46: Power Equipment – order finalization increased 70% yoy and 37% mom


-150

200

550

900

0

5

10

15

20

25


%Rs bn

Water YoY - Growth (RHS)

-5000

0

5000

10000

15000

20000

0

20

40

60

80


%

Rs bn

Irrigation YoY - Growth (RHS)

-1000

500

2000

3500

5000

0

50

100

150

200


%

Rs bn

Real Estate YoY - Growth (RHS)

-150

-50

50

150

250

0

10

20

30


%

Rs bn

Process YoY - Growth (RHS)

-150

-50

50

150

250

350

0

20

40

60

80


%

Rs bn

Power Distribution YoY - Growth (RHS)

-200

800

1800

2800

0

40

80


%Rs bn

Power Equipment YoY - Growth (RHS)




May 12, 2020| 11

Exhibit 47: Major orders awarded in April’20

Awardee Value

(Rs bn) Scope of Work

Completion (Month)

Vikram Solar Ltd. 17.5 Vikram Solar bagged a contract from NTPC for a 300 MW solar plant project located in Rajasthan. 0

Tata Power Solar

Systems Ltd. 17.3

Tata Power Solar Systems bagged a contract from NTPC to build the 300 MW solar project under

the CPSU-II. 18

G R Infraprojects Ltd. 5.9

G R Infraprojects bagged a contract for construction of elevated viaduct from end of the ramp at

IDPL Complex to start of the ramp at Rajiv Chowk & 3 elevated stations viz. Udyog Vihar, Sector-17

and Rajiv Chowk of Delhi-Gurgaon-Satnaur Badesron RRTS corridor.

0

BEML Ltd. 4.0

BEML bagged a contract for supply of 7 150-T dumpers and 8 190-T dumpers under trial cum sale

along with 8 years spare parts. These dumpers will be deployed at SECL Gevra Project and M/s

NCL Amlohri and Nigahi Projects, respectively.

0

ABB Power Products &

Systems India Ltd. 1.7

ABB Power bagged a contract from Indian Oil Corporation to ensure reliable grid connection at its

Barauni Refinery in Bihar. 0

Prakash Asphaltings &

Toll Highway India Ltd. 1.2

Prakash Asphaltings & Toll Highway India bagged a contract for collection of user through user fee

collecting agency at 11 toll plazas of Kundli Manesar Palwal Expressway in Haryana. 6

GPT Infraprojects Ltd. 1.1 GPT Infraprojects bagged a contract for widening to 2 lane with hard shoulder of Churachandpur to

Tuivai section of NH 102B in Manipur on EPC basis under Bharatmala. 0

Devendra Construction

Co. 1.0

Devendra Construction Co., bagged a contract for design & build drinking water supply system

including water treatment plant at Chawinda Kalan village, Chogawan block of output capacity of 22

MLD to various villages of block Chogawan, Ajnala, Harsha, Chhina & Attari in Amritsar district of

Punjab on DBOT basis and operation & maintenance of 10 years after commissioning.

30

VA TECH Hydro India

Pvt.Ltd. 0.9

VA TECH Hydro India bagged a contract for operation, maintenance and management of the

Madinat Salman Sewage Treatment Plant and Long Sea Outfall for a period of 5 years in Kingdom

of Bahrain.

0

Indian Oil Petronas Pvt.

Ltd. 0.8

Indian Oil Petronas bagged an operation and maintenance contract at Banka LPG Bottling Plant on

leave and license model. 60

Nasim Ahsan

Construction Pvt. Ltd. 0.5

Nasim Ahsan Construction bagged a contract for dismantling of 22 vertical tanks of different

capacities construction of 4 new tanks including the allied civil, mechanical & electrical &

instrumentation jobs in connection with BR-9 project at Barauni Refinery of IOCL, Barauni in

Begusarai district of Bihar.

0

Sai Engineering

Foundation 0.5

Sai Engineering Foundation bagged a contract for upgrade of road stretch from Panol-Jhandutta

Nand-Nagroun Road and construction of bridge at Nand-Nagroun on Govind Sagar lake in Himachal

Pradesh under CRF.

24

Sainik Mining & Allied

Services Ltd. 0.3

Sainik Mining & Allied Services bagged a contract for hiring of pay loaders for mechanical transfer of

coal into railway wagons of Bhubaneswari OCP, Jagannath Area, MCL. 36

Kirloskar Pneumatic Co.

Ltd. 0.3

Kirloskar Pneumatic Co., bagged a contract for supply, installation, commissioning of one no. of new

complete reciprocating natural gas compressor package on lump sum turnkey basis at existing

compressor station of M/s DNP Ltd., at Madhuban, Duliajan.

14

N. C. Paul & Co. 0.3

N. C. Paul & Co., bagged a contract for contractual loading and transportation of 35 LTe Coal from

MIC unit and 3 and 4 incline unit to POCP siding I and II during the period of FY20-21 under Jhanjra

Project Colliery, Jhanjra.

12





May 12, 2020| 12

Exhibit 48: Peer comparison

Companies Price (Rs)

Mkt Cap (Rs bn)

Reco Target

Price (Rs)

PE (x) PB (x) ROE (%)

FY20E FY21E FY22E FY20E FY21E FY22E FY20E FY21E FY22E

ABB 864 192 SELL 791 50.7 47.1 37.7 5.1 4.7 4.3 9.5 10.4 12.0

BHEL 22 77 BUY 37 26.0 15.2 8.3 0.3 0.3 0.3 1.0 1.7 3.0

Cummins India 370 100 BUY 511 15.4 17.5 13.8 2.4 2.3 2.2 15.8 13.3 16.3

GE T&D India 72 22 HOLD 85 NA NA 14.2 1.4 1.5 1.4 -6.3 -0.2 10.3

Kalpataru Power 200 27 HOLD 198 5.9 6.8 7.9 0.8 0.8 0.7 15.3 11.9 9.3

KEC International 198 40 HOLD 175 8.6 10.8 7.9 1.7 1.5 1.3 21.9 15.0 17.8

KNR Construction 188 26 BUY 256 10.8 10.7 6.6 1.6 1.4 1.2 16.0 14.0 19.3

Larsen & Toubro 822 1,214 BUY 1,127 12.5 14.0 10.2 1.7 1.6 1.4 12.9 10.7 13.4

PNC Infratech 107 29 BUY 151 6.2 10.2 6.3 1.1 1.0 0.8 19.1 10.0 14.2

Siemens 1,030 421 SELL 920 33.7 32.5 29.7 4.1 3.7 3.4 12.5 11.9 12.0

Thermax 710 79 SELL 600 30.6 29.6 23.7 2.5 2.4 2.2 8.4 8.3 9.8

Triveni Turbine 64 21 BUY 93 14.8 17.0 13.8 3.9 3.5 3.0 29.0 21.6 23.5

Source: Emkay Research




May 12, 2020| 13

Emkay Alpha Portfolio – Engineering & Capital Goods

EAP sector portfolio

Company Name BSE200 Weight

EAP Weight

OW/UW (%)

OW/UW (bps)

EAP Weight (Normalised)

Engineering & Capital Goods 2.45 2.39 -2% -5 100.00

ABB 0.00 0.00 NA 0 0.00

BHEL 0.06 0.11 88% 5 4.57

Cummins India 0.10 0.12 23% 2 5.10

GE T&D India 0.00 0.00 NA 0 0.00

Kalpataru Power 0.00 0.00 NA 0 0.00

KEC International 0.00 0.07 NA 7 2.81

KNR Constructions 0.00 0.06 NA 6 2.36

Larsen & Toubro 2.04 1.94 -5% -10 79.46

PNC Infratech 0.00 0.04 NA 4 1.79

Siemens 0.19 0.00 -100% -19 0.00

Thermax 0.06 0.00 -100% -6 0.00

Triveni Turbine 0.00 0.04 NA 4 1.79

Cash 0.00 0.05 NA 5 2.12


* Not under coverage: Equal Weight

High Conviction/Strong Over Weight High Conviction/Strong Under Weight

Sector portfolio NAV

Base Latest

1-Apr-19 9-Aug-19 11-Nov-19 10-Feb-20 9-Apr-20 11-May-20

EAP - Engineering & Capital Goods 100.0 100.8 103.1 93.9 61.2 62.2

BSE200 Neutral Weighted Portfolio (ETF) 100.0 96.2 100.2 90.3 58.2 58.2

*Performance measurement base date 1st April 2019


NAV chart


Please see our model portfolio (Emkay Alpha Portfolio): SMID

Please see our model portfolio (Emkay Alpha Portfolio): Nifty

“Emkay Alpha Portfolio – SMID and Nifty are a supporting document to the Emkay Alpha

Portfolios Report and is updated on regular intervals”

50

64

78

92

106

120

Apr-19 May-19 Jul-19 Aug-19 Oct-19 Dec-19 Jan-20 Mar-20 May-20

NAV

EAP - Engineering & Capital Goods BSE200 Neutral Weighted Portfolio (ETF)

Analyst: Amar Kedia

Contact Details

[email protected]

+91 22 6624 2466

Sector

Engineering & Capital Goods

Analyst bio

Amar Kedia holds a Post Graduate

Diploma in Management from IIM

Lucknow and comes with a cumulative 15

years of research experience. His team

currently covers 14 stocks in the Indian

Engineering and Capital Goods sector.


https://web3.emkayglobal.com/ResearchAccess/Upload/SMID_May20.pdf

https://web3.emkayglobal.com/ResearchAccess/Upload/Nifty_May20.pdf

mailto:[email protected]



May 12, 2020| 14

Emkay Rating Distribution

Ratings Expected Return within the next 12-18 months.

BUY Over 15%

HOLD Between -5% to 15%

SELL Below -5%

Completed Date: 12 May 2020 22:44:11 (SGT) Dissemination Date: 12 May 2020 22:45:11 (SGT)

Sources for all charts and tables are Emkay Research unless otherwise specified.

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May 12, 2020| 15

ANALYST CERTIFICATION BY EMKAY GLOBAL FINANCIAL SERVICES LIMITED (EGFSL) The research analyst(s) primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views. The analyst(s) also certifies that no part of his/her compensation was, is, or will be, directly or indirectly, related to specific recommendations or views expressed in the report. The research analyst (s) primarily responsible of the content of this research report, in part or in whole, certifies that he or his associate1 does not serve as an officer, director or employee of the issuer or the new listing applicant (which includes in the case of a real estate investment trust, an officer of the management company of the real estate investment trust; and in the case of any other entity, an officer or its equivalent counterparty of the entity who is responsible for the management of the issuer or the new listing applicant). The research analyst(s) primarily responsible for the content of this research report or his associate does not have financial interests2 in relation to an issuer or a new listing applicant that the analyst reviews. EGFSL has procedures in place to eliminate, avoid and manage any potential conflicts of interests that may arise in connection with the production of research reports. The research analyst(s) responsible for this report operates as part of a separate and independent team to the investment banking function of the EGFSL and procedures are in place to ensure that confidential information held by either the research or investment banking function is handled appropriately. There is no direct link of EGFSL compensation to any specific investment banking function of the EGFSL. 1 An associate is defined as (i) the spouse, or any minor child (natural or adopted) or minor step-child, of the analyst; (ii) the trustee of a trust of which the analyst, his spouse, minor child (natural or adopted) or minor step-child, is a beneficiary or discretionary object; or (iii) another person accustomed or obliged to act in accordance with the directions or instructions of the analyst. 2 Financial interest is defined as interest that are commonly known financial interest, such as investment in the securities in respect of an issuer or a new listing applicant, or financial accommodation arrangement between the issuer or the new listing applicant and the firm or analysis. This term does not include commercial lending conducted at the arm’s length, or investments in any collective investment scheme other than an issuer or new listing applicant notwithstanding the fact that the scheme has investments in securities in respect of an issuer or a new listing applicant.

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May 12, 2020| 16

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