X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
BSES: Aiming for the long haul - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Oct 9, 2001

    BSES: Aiming for the long haul

    BSES, the aggressive Mumbai distributor and generator, has been out of the limelight for quite some time now. It has been facing a lull on the bourses too. We take a look at what’s cooking and what are its prospects going forward.

    BSES Limited holds the licence to distribute power to the northern suburbs of Mumbai upto 2011. It has more than 2 m customers with no agricultural load. Until FY96, BSES functioned purely as a power distribution company. However, this changed once the company’s 500 MW thermal generation plant at Dahanu was commissioned. It now generates 55% of its power requirements in-house. In FY01, Reliance Industries became the single largest stakeholder in the company (30% stake).

    BSES also has a significant presence in the EPC business. This division contributed Rs 5.3 bn in FY01 (up from Rs 4 bn in FY00). Its contracts and EPC order book stood at Rs 14 bn in July 2001. The EPC division has executed projects worth Rs 35 bn since its inception in FY96. BSES was also successful in bagging 3 Orissa distribution circles out of 4. It has so far invested Rs 1.2 bn for the 51% equity in the project. The circle has a consumer base of 0.8 m with consumption of around 685 MW. The distribution zone has an agricultural load of less than 6%.

    In FY01, higher oil prices marred BSES's bottomline as its cost of electrical energy escalated by 43%. This resulted in a small 2% drop (YoY) in the company’s FY01 profits. BSES's bottomline would have shrunk even more had it not been for the taxation benefits it received, which saw taxation provisioning decline by 68%. The company's EPC business meanwhile, continues to deliver growth for the company. In 1QFY02 this business grew by 71%. In FY01, it had grown by over 35% YoY. However, the costs associated with this business have also grown in tandem with the sales growth.

    Corporate Plan (upto 2012)
    Core Areas Target
    Generation 6000 MW
    Transmission 3 networks
    Distribution 6 areas (incl. Orissa)
    Investment strategy  
    Core business 85%-90%
    Coal washery & telecom 10%-15%

    The company's Saphale project in Maharashtra has made no headway and therefore hinders BSES's future growth from sale of electricity, atleast in Maharashtra. Its distribution business in Orissa is still in the red and would require a couple of years to give returns. Though there is anticipation that the Reliance group may route all its power ventures through BSES, the group has as yet not commented on the issue.

    Added to this, in the dispute of standby charges by the Maharashtra Electricity Regulatory Commission, BSES has deposited another Rs 143 m (in addition to Rs 540 m deposited in FY01). The concern is that the company has not acknowledged this liability (over Rs 2 bn) and has made no provision towards it. The liability, if it arises, would result in a one time hit to the company.

    Considering BSES’s technical prowess it would no doubt play a significant role in India’s power development scenario over the long run. Its corporate plan targets generating capacity of 9000 MW (piggy backing on Reliance), 3 networks in power transmission and 6 new areas in power distribution (including Orissa) by the year 2012.

    However, with power still dependent on the government’s policy one cannot expect much over the short term. Also, what role BSES would play in the Reliance scheme of things is not yet clear. At Rs 174 the stock trades at a P/E of 7.7x FY02 projected earnings.

     

     

    Equitymaster requests your view! Post a comment on "BSES: Aiming for the long haul ". Click here!

      
     

    More Views on News

    NTPC: Higher Tax Provision Impacts Profits (Quarterly Results Update - Detailed)

    Mar 30, 2017

    NTPC declared results for the quarter ended December 2016. The company reported revenue growth of 10.9% while profits declined by 7.5% YoY.

    More Views on News

    Most Popular

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process)(The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    Aug 10, 2017

    Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.

    It's the Best Time to Buy IT Stocks(Daily Profit Hunter)

    Aug 16, 2017

    The IT Sector could be in an uptrend till February 2019. Are you prepared to ride the trend?

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    RELIANCE INFRA SHARE PRICE


    Aug 23, 2017 (Close)

    TRACK RELIANCE INFRA

    • Track your investment in RELIANCE INFRA with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks

    MORE ON RELIANCE INFRA

    RELIANCE INFRA 5-YR ANALYSIS

    Detailed Financial Information With Charts

    COMPARE RELIANCE INFRA WITH

    MARKET STATS