Sunday, March 21, 2010

Stock Idea: UB Engineering Ltd.

UB Engineering Ltd. (Code: 509992) (Rs.137.45), part of the Vijay Mallaya famed UB group, provides integrated design, engineering, procurement, construction and project management services for the infrastructure and energy sectors. It carries out EPC projects for complete power generation plants upto 50 MW and undertakes turnkey business for high voltage & extra high voltage (EHV) sub-stations upto 400 kV class and associated transmission lines right from the conceptual stage to commissioning stage in India and abroad. It even undertakes overhauling and maintenance of plants in varied industries and has a healthy order book of approx Rs.700 cr. Financially, it was not faring well earlier as it was in deep losses with high debt, negative networth and lack of promoter focus. But in the last two years, it made a smart turnaround on the back of its financial/debt restructuring and infusion of additional equity under its new management team and came out with a 5:13 rights issue at Rs.126 per share in December 2007. Today, its net worth is not only positive but it is also almost debt-free with the sharp rise in its profitability. In fact, it has already posted an EPS of Rs.12 for the nine months period ending 31 December 2009. With the government making all time high budgetary allocations for the infrastructure sector, the company’s future prospects look very promising. Hence for FY10, it may clock a turnover of Rs.450 cr. with PAT of Rs.25 cr. and post an EPS of Rs.15 on its equity of Rs.17.10 cr. Technically, the scrip has been consolidating between Rs.120-130 for the last four months. Long-term investors can keep on accumulating at every sharp decline.

Source: Internet (Moneytimes)

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