Saturday, June 14, 2008

Investment Pick: Genus Power Infrastructure ltd.

Genus Power Infrastructure Ltd
CMP Rs.398 Buy, Upgraded Target Price of Rs.644
Genus Power Infrastructure Ltd. (Genus), has delivered robust growth in the top line as well as the bottom line for the quarter ended 31st March 2008. Some of the key highlights of the financial performance of Genus for the said period are as follows:
Net sales increased by 27.4% YoY and 83.8% QoQ to Rs.1936.7 mn in Q4FY '08.
EBIDTA increased to Rs.350.5 mn in Q4FY '08 i.e a at YoY growth of 75.9% and 112.1% QoQ growth. EBIDTA margins jumped by around 499 bps YoY to 18.1%. This was mainly due to a 913 bps reduction in the other expense although the raw materials as a percentage of sales increased to 77.8% from 70.4% during Q4FY07.
The Profit before Tax (PBT) including Other Income increased by 89.5% to Rs.294.4 mn in Q4FY '08. The PBT margins increased by 498 bps to 15.2% in this period.
The Profit after Tax (PAT) increased to Rs.255.5 mn in Q4FY'08, exhibiting a growth of 102.2% YoY.
For the full year FY'08 period, the Company showed a growth in net sales of 35.3% to Rs.4832.8 mn.The EBIDTA increased 53.7% to Rs.818.7 mn mainly due to lower other expenses, which decreased by 49.4%. Its PAT increased to Rs.516 mn, registering a growth of 85.9%. Its energy meters segment contributed around 48.3% (Rs.2430 mn) and turnkey projects segment contributed 42.1% (Rs.2120 mn) to its revenues during FY'08.
The Company has an order backlog of Rs 4170 mn, of which about 60% orders are from meters business. The Company has already participated in tenders more than worth Rs 48390 million, out of which the Company is already ´L-1´ in orders worth Rs 4500 million.
Genus has bought a 6 MW power generation plant from Genus Power Products Ltd (GPPL). Subsequently the GPPL shareholders would receive 1 fully paid-up share of GPIL for every 60 fully paid-up shares of GPPL currently held by them.

We have increased our numbers for FY09E and introduced new numbers for FY10E on back of better then expected numbers in FY08 and better visibility. At the current market price of Rs 398, the stock is available at an attractive valuation of 9.6x its FY '09E earnings of Rs 41.4 and 7.4x its FY '10E earnings of Rs.53.7. We upgrade our rating on the stock to a BUY with an increased price target of Rs.644 (12x FY '10E EPS).

Source: Internet

Stock Idea: C&C Constructions Ltd.

Multi Bagger: C&C Constructions Ltd (K.R Choksey Picks Report Dated: June 09, 2008)
C&C Constructions Ltd (C&C) is an infrastructure project development company providing engineering, procurement and construction (EPC) services for infrastructure projects in India and abroad (Afghanistan). Their project expertise is primarily in transportation engineering projects including roads, bridges flyovers and airport runways especially in inhospitable environments. We Initiate coverage on C&C with a BUY recommendation based on SOTP valuations giving a 12 months price target of Rs 276, an upside of around 46% from the current levels. Investment Rationale:Robust Order Book: C&C has a robust order book of Rs 1,668 crore (5.05x FY2007 and 3.87x TTM net sales) which has swollen by about 58.7% since FY2007. Road segment constitutes approximately 96% of the total order backlog.
Strong operating margins compared to peers: C&C enjoys operating margins in the range 18-20%, inspite of 96% of the order backlog in road segment. The high margin is attributable to operations in areas which has geographical and political constraints. Operations from Afghanistan fetch margins in the range of 22-25%. We believe C&C is well placed to enjoy higher operating margins due to expertise in executing these projects. Expertise in executing projects in inhospitable conditions:C&C have been successful in executing projects in difficult operating terrains and adverse weather conditions which helps them in commanding higher operating margins. In addition unavailability of key resources like machinery, material and personnel along with security challenges also poses execution risk for the company.
Impressive financial performance: C&C reported revenue CAGR of 38.6% from FY2005 to FY2007. On operating margin front also, it enjoyed industry highest margins of 29.7% in FY2006 and 23.4% in FY2007. The company plans to diversify its areas of operations into Urban Infra, Irrigation and Power Transmission business with approximately 30% contribution by FY2010. We believe operating margin to take marginal hit, however will continue to enjoy margins above 17% going forward. Foray into BOT space:C&C has recently won BOT project from Kurali to Kiratpur on NH-21. We believe this project to be value accretive on the basis of IRR and is expected to contribute Rs 42 to the target price.
Valuations & Financials: At the CMP of Rs 172, C&C is trading at a trailing P/E of around 8.2x and at a forward P/E of around 7.46x FY08E EPS and 5.63x FY10E EPS.
Source: Internet (PYT)

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