BSE company announcement

Areva T&D

Areva T&D India Ltd has informed BSE regarding a Press Release dated April 16, 2009 titled "AREVA T&D India bags First of its kind 500 MVA Power Transformer Order from PowerGrid

First of its kind of Transformer to be built in india itself.
= = = = = = = = = = = = = = = = = = = = = = = = = = =

Well that's why it commands higher valuations.


Edited by chimak10 - 16/Apr/2009 at 4:24pm

One other player which comes in this sector is ICSA, with the boom in power sector, these proxy players are worth investing.

Do ICSA or KLG Systel make transformers?

I think there's a separate thread on ICSA, but I'm not sure about KLG Systel.

Indo Tech Transformers — Open Offer: Accept






Considering the premium offered and the uncertainties lingering on the business strategy to be adopted, investors should tender to the offer.




Utilisation levels could improve once the company starts pre-qualifying for higher range transformers.


Vidya Bala


Investors can consider tendering their shares of Indo Tech Transformers to the open offer made by Mexico-based Prolec-GE, considering the premium offered over current market price and the uncertainties lingering on the business strategy to be adopted, after the new management takes over.

The open offer, priced at Rs 406, is a good 27 per cent premium to the current market price (Rs 320). Prolec-GE is also buying the entire promoter stake of 54.3 per cent at the same price through an off-market transaction.

Over a three-year period, however, growth in the transformer business in general and the business opportunities arising from the takeover by an international company could provide upside to the stock. Investors can tender to the open offer and cut their exposures now, as not all the shares that are tendered may be accepted. Those with a two-three year perspective can retain the remaining shares.

At the current market price, the stock trades at seven times its trailing 12 month earnings. Investors need to take note that price of the shares may witness a decline after the offer, if they were to adjust to fair value. At the industry average P/E of 5 times, the fair value of the stock is about Rs 220.
Details of offer and acquirer



The offer made by Prolec-GE is open during April 4-23. Investors need to note that the open offer is for 20 per cent (21.24 lakh shares) of the share capital. This translates into an acceptance ratio of 43.8 per cent. In other words, assuming all shareholders tender their shares, only four out of nine shares tendered would be accepted. After the offer, the acquirer Prolec-GE would hold a 74.3 per cent stake in Indo Tech Transformers. The existing promoters would cease to hold any shares.

Prolec-GE, a Mexican transformer manufacturer, with a turnover of over Rs 3,000 crore (CY 2007), is a joint venture between Xignux of Mexico and General Electric Company. This company, with its manufacturing facility in Mexico, caters to markets in North and South America as well as some of the African and West Asian countries. The company produces higher range of transformers compared with Indo Tech’s transformers.

The offer document states that this acquisition is being made to gain foothold in the emerging markets. This strategy appears appropriate in the Indian context in the light of the aggressive power capacity additions planned in the country. The strategy means that Indo Tech’s products may also be exported to more West Asian and African markets, given the logistics convenience.

To this extent, exports, which were around 10-12 per cent of Indo Tech’s revenue for FY-08, may see some ramp-up by FY11. However, it is also possible that Prolec-GE would treat the Indian unit as a lost-cost manufacturing base to provide inputs for or supplement its own product range.

If this occurs, the high profit margins of Indo Tech (superior to Prolec-GE) may see some contraction. However, given the wide divergence in the product range offered by the two companies, we believe that revenue from outsourcing to parent may be a smaller proportion of total revenues over the medium-term.

Investors who hold the remaining shares of the company would, therefore, have to look for cues on the above to discern Indo Tech’s profitability in the future.
Slowdown but managing well


Indo Tech has not been completely immune to the current economic slowdown. While it managed robust growth up to the quarter ended September 2008, the December quarter results were more tepid ; revenues grew less than 6 per cent over corresponding quarter last year, while net profits improved by just 1 per cent.

The company’s operating profit margins dropped by 100 basis points to 32.9 per cent on the back of lower realisations which, in turn, have been marginally depressed as a result of passing on commodity price declines to customers with escalation clauses. Order inflows too appear to have slowed.

The company’s order book at about Rs 120 crore translates into about two quarter revenues instead of a revenue cover of three-four quarters seen earlier.

Indo Tech’s overall profitability could improve if its newly expanded Kancheepuram facility improves its utilisation. Currently only 25-30 per cent of this plant’s capacity is being utilised by the company.

This facility, with capacity to produce up to 400 MVA capacity transformers (from 100 MVA earlier), may gradually improve utilisation levels once the company starts pre-qualifying for higher range transformers. In this context, the international acquirer may bring in orders for the higher range of transformers.



The parent of this company is GE will they delist the stock & With parent like GE dosen't it make a great buy



Edited by chimak10 - 18/Apr/2009 at 9:50am