BGR Energy – Buy

Goldman has initiated coverage on BGR Energy with a BUY Rating. BGR will benefit from lack of a sufficient number of turnkey BoP (Balance of Plant) players in the Indian power equipment space – Most individual component makers currently lack the ability to provide turnkey services.

With its order book growing at a CAGR of 84% over FY08-10 and sales CAGR based on FY08-10 reported numbers of 42% over this period, BGR has displayed a strong execution track record. (more…)

HPCL + BPCL – Indian Oil -ONGC – Renewed Energy

Just after the Government went to De-Regulate Petrol Prices, Brokerages were busy BUYING Oil Marketing Companies and later upgrading the same.

Indian Oil Corporation -Outlook for deregulation has thus brightened. The upside to IOC’s FY11E EPS in this scenario would be 20% to Rs42/share. Even without full reforms government being more generous than assumed by us in compensating R&M companies cannot (more…)

Reliance Industries – Overseas E&P production portfolio

RIL announced its second JV for shale gas assets in the US, with Pioneer Natural Resources and Newpeck LLC in the Eagle Ford shale formation. RIL will acquire ~118k acres from Pioneer and Newpek for a total consideration of US$1.3bn. RIL will pay a total of US$1.3bn, US$263mn in upfront cash and the remaining US$1.05bn in the form of a drilling carry. The deal implies price of US$11,144/ acre, however, considering the drilling carry is spread over four years, adjusting for time value the deal implies a price of US$9,438/acre using a discount rate of 10%, which is lower than the US$10,797/acre paid by RIL to Atlas in its first transaction.

We are positive on RIL’s recent investments in shale gas and its stated strategy of building a sizeable portfolio there. However, NPV (more…)

Shree Renuka Sugars – Equipav – A Fair Deal

Shree Renuka Sugars (SHRS) will pay USD 250 mn (INR 11.5 bn) to acquire 50.34% stake in Equipav, 25% below INR 15.3 bn quoted in February 2010. Balance stake in the venture is to be held by the founding Equipav Group – the Toledo, Tarallo and Vetorazzo families. At the revised amount, SHRS says that the EV of Equipav comes to USD 1,147 mn, translating into an EV/tonne of USD 109.

The international raw sugar price bottomed out (more…)

Petrol + Diesel Price Hike – Fill up your tanks

The Empowered Group of Ministers (EGoM) plans to re-convene on 25th June 2010 to consider petrol price decontrol, according to media reports. We estimate that petrol prices may be hiked by Rs 4/litre (8%), if decontrolled. We believe this will likely be taken positively by the market as the first step towards eventual decontrol of diesel as (more…)