Sunday, March 13, 2011

Stock Idea: Diamond Power Infrastructure (DPIL)

Diamond Power Infrastructure (152)
(BSE Code - 522163 NSE Code - DIAPOWER)
(P/E-5, Equity - Rs37.21 cr, Market Cap - Rs565 cr)

Diamond Power Infrastructure (DPIL) is a play on the power cable and transmission conductors segment, both in the domestic and export markets. Established in 1970, Vadodara based DPIL is one of the oldest and largest manufacturer of Wire Products in the country. It is the third largest manufacturer of All Aluminum Alloy Conductors (AAAC) in India. DPIL manfacturers the entire range of Power cables from Aluminum to copper for power and control applications. To capitalize on the current growth opportunity in the power sector in the country DPIL in 2007 had diversified into undertaking EPC business in a bigger way. The company has adopted both inorganic and organic approach to emerge as a leading EPC player in the turnkey power projects. DPIL is now an integrated turnkey power player with strong presence in cables and transformers. DPIL is a Gujarat based transmission and distribution services provider and equipment manufacturer company. DPIL provides turnkey services in T&D, manufactures Power Cables upto 550KV, Power & Distribution Transformers upto 220KV, Transimission and Distribution Conductors upto 765KV and Transmission Towers.
With the acquisition of DPTL (Western Transformers) in 2007, DPIL has captive control on three critical power transmission and distribution products namely conductors, cables, transmission towers and transformers. With the proposed commissioning of EHV cables facility in Q4FY11, it will be virtually a fully integrated player in the power T&D segment. During Q1 FY11, DPIL has completed the expansion of its LT and HT cables capacity. The company is currently implementing the EHV cables facility. The transmission towers will mainly cater to the in house requirement of EPC projects in rural electrification. The demand for EHV cables is expected to grow tremendously in the coming years
DPIL received orders aggregating Rs. 332 cr. in July 2010. The total outstanding orders as on July 16, 2010 stood at Rs 1450 crs. DPIL has received orders from various agencies like Gujarat Urja Vikas Nigam, MSEDCL, HVPNL, PSEB, Areva T&D and Larsen and Toubro Ltd. In July 2010, DPIL had raised Rs.114 Cr through QIP by issuing 5.59 Mn shares at Rs. 203.80 per share. It has also raised Rs 18 Cr from Kotak Private Equity. DPIL’s major capex will get completed in FY11. DPIL is at the fag end of a Rs 270 cr. capex consisting of a expansion in LT/HT cables, transmission towers and EHV cables. Post this, DPIL will have adequate capacity for driving growth in the medium-term. DPIL has also strengthened its balance sheet by infusing funds worth Rs 150 cr. through QIP and warrants. The funds will enhance the working capital of DPIL thus enabling it to bid for higher volume of project work.
Net profit of DDPIL rose 110.29% to Rs 29.23 cr. in the Q3 ended December 2010. Sales rose 80.33% to Rs 378.48 cr. in the quarter. For the half year ended Sept. 2010, DPIL has posted 105.4% rise in net sales to Rs 731.67 cr. and the net profit during this period grew by 133.2% Rs 58.98 cr.. On a equity of 37.21 cr.(Promoters’stake- 40.2% FII/MF stake-27.82%), the half yearly EPS stood at Rs 15.85. For the year ended March 2010, DPIL had posted net profit of Rs 62 cr. on net sales of Rs 860 cr.. The dividend declared was 15% and DPIL had also issued bonus shares in the ratio of 1:3 in Dec. 2009. At Rs 152, the DPIL stock trades at 5.4 and 4.4 times its estimated EPS for FY11(Rs 28) and FY12(Rs 34), respectively.
Investors can start accumulating the DPIL stock at current levels and add more on declines for decent returns of 40%-50% over the next 6-9 months
Source: Internet (Valuenotes by Sanjay Chhabria)

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