>ALSTOM PROJECTS INDIA LTD (INDIABULLS)

Strong order inflows strengthen near-to-medium term outlook
Alstom Project India Limited (APIL) reported a strong set of numbers for Q1’10. APIL’s net sales increased 36.7% yoy to Rs. 5 bn. EBITDA increased 129.1% yoy to Rs. 573 mn, largely because of the decline in raw material costs. In the near-to-medium term, we expect the Company to have robust order inflows on the back of the Government of India's (GoI's) expansion of power generation capacity, and GoI’s increasing focus on non-conventional sources of energy and refurbishment of public transport, including the metro rail services, which augers well for the Company’s Power and Transport segments.

Order inflows to increase: At the end of FY09, the Company’s order book stood at Rs. 26.1 bn. In FY10, so far the Company has received large orders worth Rs. 6.4 bn from BHEL and Lanco Infra. In the near-to-medium term we expect the order book for the Power segment to get a boost on the back of the GoI's expansion of power generation capacity and the Company’s strategic ties with major players in the sector such as BHEL and NTPC. We expect the Company to benefit from the GoI's huge investments in the Power sector, and accordingly, we have upwardly revised our estimates for the Company’s order book to Rs. 29.8 bn for the FY10.

Transport segment’s order book to improve: In FY10, the Company received a major order from the Bangalore Metro Rail Corporation to supply signaling systems worth Rs. 1.9 bn, which represents 8.3% of the FY09 total revenue. Currently, the transport segment contributes ~2% of revenues; however, we expect its contribution to increase in the near-to-medium term on the back of a major overhaul in public transport and the commencement of metro rail services in various cities such as Bangalore, Hyderabad, and Chennai. Also, the Company plans to increase the business volume of the segment by supplying various global units with products from its Coimbatore manufacturing unit. Accordingly, we expect the order book of the segment to grow in the near-to-medium term.

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