Citi initiates coverage on Areva T&D with 'hold' rating

Citigroup has initiated coverage on Areva T&D India with a ‘hold’ recommendation and a target price of Rs 1,809. According to the brokerage house, Areva T&D’s EPS has witnessed a CAGR of 117% over CY04-07 and expanded return on equity (RoE) from 11.4% to 46.5%, aided by a focus on higher-margin national grid/selected orders for the Accelerated Power Development and Reform Programme (APDRP) and growth off a lower base.

Areva T&D India’s EPS is expected to witness a CAGR of 32% over CY07-10E, versus that of ABB at 25%, with higher RoEs of ~40% versus ABB at ~30%. According to an article in the Economic Times, Areva T&D India has edged past ABB in the power T&D business in India.