Power & capital goods results preview for Q3FY12: KRChoksey

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Power & capital goods results preview for Q3FY12: KRChoksey

KRChoksey has come with its December quarterly earning estimates for power & capital goods sector.

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KRChoksey has come with its December quarterly earning estimates for power & capital goods sector. According to the research firm BHEL , sales is expected to grow largely in line with our full year estimates. Order book to aid sales growth EBIDTA is expected to grow at 8% as we expect higher raw material cost to primarily drag EBITA margins by approx 170 bps.

KRChoksey earning estimates:

• Moderate sales growth on back of carry forward orders
• Operating margins are expected to be under pressure considering intense competition and subdued order inflow, which has lead to aggressive biding in the industry
• Interest cost is expected to increase significantly on YoY basis, especially for MHE and Transmission players.
• Subdued order inflows during the quarter (except in T&D segment)

Key Factors to watch in Q3FY12E result:
• Execution of projects considering uncertain macro environment.
• Revision of order inflow guidance for current year and management's view on FY13 order inflows.
• Working capital cycle of EPC companies.
• Impact of adverse currency movement on net importers

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