Scripscan:Areva T&D India Ltd
cmp:194
Code:522275
Story:Areva T&D India Limited manufactures and sells electrical transmission and distribution products. The company’s products include transformers, circuit breakers, gas insulated switchgears, generator circuit breakers, instrument transformers, protection relays, and power system automation equipments. It also undertakes turnkey projects, such as building substations and switchyards, as well as 765 KV substations, HVDC substations, and gas insulated substations. In addition, the company provides hardware and software for managing energy flows from load dispatch centers. It offers supervisory control and data acquisition solutions for managing energy flows. Further, the company provides services for network planning and after sales services for its products and systems. It primarily sells its products in India, Qatar, Kenya, Germany, China, Brazil, France, the United Kingdom, and Vietnam.Areva T&D India Limited is a subsidiary of ALSTOM Grid SAS.Given the deteriorating dynamics in the T&D space (extremely competitive landscape),I feel Areva is likely to face pressures on the earnings front. Despite some improvement in the OPM during the current quarter,I believe margin recovery will not be as swift as anticipated (read concerns). Further, lack of positive news flow in the sector (read sector related) is likely to have a downward bias on the stock. Given these negatives, the stock appears expensive at the CMP (27.3x CY2011E EPS and 23.4x CY2012E EPS). Upside from the current level seems limited, in my view, until concerns dissipate.
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