*Bharat Bijlee Ltd:TP 2200-2400*

Rationale for recommendation due to Growth Story emerging Core business along with HUGE INTRINSIC VALUE ( nearly 3x of CMP)
❖ Bharat Bijlee Limited established in 1946 , is one of the leaders in the electrical engineering industry in India.

A multi-product, multi-divisional organization, its main business segments are Transformers, Projects, Electric Motors, Elevator Systems and Drives & Automation.

Bharat Bijlee (BBL) operates in two business segments—power systems (56% top line) and industrial systems (44% top line).

Intra-state investments in 13th Plan to drive demand for power transformers

In the 13th Plan, intra-state investments of INR 1,30,000 cr under category 132kV to 220kV and 400 kV are envisaged. These investments will be contributed by state transcoms and central government sponsored schemes (IPDS+DDUGJY).

BBL to be a strong beneficary of these investments as the as company has establisehed strong credentials in 132 kV to 220 kV class transformers up to 200 MVA range.

BBL’s Industrial systems business is expected to grow gradually as industrial capex is slowly pick up.

However, BBL continues to adopt a conservative approach towards building the order book in order to ensure that margins, project readiness for timely completion and collection of dues do not drag the performance and profitability of the business

With government aggressive mission of ‘Electricity for all by 2019’ will be the demand driver for the power and capital goods sector.

Institutional  Share Holdings in BBL is 17%

FINANCIALS
                FY17 FY18E

Sales.     690.    750

PAT.        19.61.    23

Equity.      5.65

*EPS Rs.   34.70. 40.70*

Book Value Rs 510

Stock is trading at 30xFY18Eeps

BBL can report EPS of 50+ next year

However BBL deserves much much higher valuations due to HUGE VALUE OF ITS OTHER ASSETS:

A)  _Market Value of Listed Shares (Siemens, HDFC, ICICI etc) is around 390 Cr_ which works out toRs
*690 Per Share*

B) *BBL has  Rs.150Cr Cash/ cash equivalent. Works out to  Rs.263 Per Share*

C) BBL has its plant in Airoli Navi Mumbai ( which had become big IT hub)and the land parcel 20,00,000 Sq Feet. Very conservative market rate in Airoli is 7000 per Sq Feet. Thus, this LAND PARCEL IS WORTH 1400CR.

*TOTAL VALUE OF 3 ASSETS NAMELY INVESTMENTS, CASH, LAND BANK IS 1940 CR* AS AGAINST MKTCAP OF  680Cr

_Translates into Value of Rs.3430 whereas CMP is 1200_

BBL has potential to be 2x in 12-18 months

A strong Buy