FREE

MOSL: CAPITAL GOODS-T&D ordering accelerates in FY17-High-end technology products the key driver

​CAPITAL GOODS: T&D ordering accelerates in FY17; High-end technology products the key driver

PGCIL accounts for 45-50% of the annual transmission capex in India. It is amongst the largest customers for Indian transmission equipment suppliers. We analyze below the ordering trends by PGCIL during FY17 and implications for the Indian transmission equipment suppliers.

During FY17, PGCIL placed orders worth INR281b (up 68%), led by robust ordering in the substation (60% of ordering; up 275%), transmission line (21% of ordering; up 8%) and transformer segments (7% of ordering; up 30%).

Growth in ordering for substations was led by finalization of two large HVDC substation orders placed on ABB (Raigarh-Pugular; INR58b) and Siemens (Pugular-Trichur; INR35b).

We expect PGCIL’s orders to stabilize at INR200b-250b for the next few years, with the states driving the growth in orders/capex in the 13^th Plan (2018-2022E).

Power Grid orders at INR281b in FY17 (up 68%); substations account for INR168b (60% of total)

• ​Orders placed by Power Grid Corporation of India (PGCIL) during FY17 stood at INR281b (up 68%), with substations accounting for 60% of the total orders.
  
• Jump in substation orders during FY17 to INR168b (up 275%) was driven by the two large HVDC substation orders placed on ABB (Raigarh-Pugular; INR58b) and Siemens (Pugular-Trichur; INR35b).
  

Transformer orders at INR19.3b (up 30%), with 765kv at 78% of total; Chinese take share in 765kv segment

• ​Transformer orders were at INR19.3b (up 30%), with 765kv orders at 78% of the total.
  
• Within the 765kv segment, Indian players account for 62% of the orders while the Chinese players (TBEA Shenyang) have garnered 38% of the orders placed during the year. GE T&D had a 25% share while Crompton Greaves’ share stood at 18%. Pricing in the 765kv segment remains weak and further pressure is seen post reverse auctions being conducted by PGCIL.
  
• Within the 400kv transformers, Alstom T&D had a 57% share, followed by TRIL (at 24%) and TBEA Shenyang (at 19%).