Buy BGR Energy Systems with Perspective of Three Years Investment
Investors with a three-year perspective can consider investing in the stock of BGR Energy Systems.
The recent results posted by the company and the strong growth in order book belie fears of a slow down in the engineering services space. BGR’s well entrenched position as an EPC player in the power segment and a multi-equipment supplier in the oil and gas segment makes it a good proxy for the energy sector.
The current market price, at a sharp discount to its offer price of Rs 480, provides an attractive entry point. The stock currently trades at about 13 times its expected per share earnings for FY 2010.
BGR has an order backlog of Rs 3,212 crore and secured 46 per cent more orders than the previous year. This order growth inspires confidence at a time when some companies in the engineering sector have reported slowdown in the growth of order intake. Order inflows are key indicators of any slowdown in the sectors serviced by engineering companies. BGR’s strong order intake is indicative of capex spending in the power and oil and gas space.
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