Post the acquisition of Areva T&D by a consortium of Alstom and Schenider Electric, the operations of Areva T&D india have been bifurcated into transmission business (to be retained by Alstom group) and distribution business (to be transferred to Schneider Electric). As part of the demerger scheme, the shareholder of Areva T&D will receive one share of the demerged company (to be named Smartgrid Automation Distribution and Switchgear Ltd) for every share held in Areva T&D. Smartgrid Automation Distribution and Switchgear Ltd would be listed by the end of January 2012. The stock became ex-date on Dec 14, 2011, following which the price corrected 24% to reflect the valuation of the transmission entity only. Based on DCF calculations, the target price works out to Rs 158 per share, thus valuing at 22x CY12 earnings. The growth outlook for the T&D equipment sector continues to be weak given overall reduction in power and industrial sector investments pipeline in H1
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