SUNIL HITECH
 
  

 

SHARETIPSINFO >>Research Reports >>Sunil Hitech Report (16-10-2009)

 

LISTING
CMP

Rs 185

52 WEEK HIGH/LOW
Rs 198/Rs 48
FACE VALUE
Rs10
PE RATIO

9

AVERAGE VOLUME
96798
MARKETCAP
Rs 225 crore
P/BV

3.7

COMPANY OVERVIEW:
Sunil Hitech was established in the year 1998.It is one of the few companies which is pre-qualified to undertake BOP packages & erections, testing and commissioning of boilers and auxiliaries of up to 650n MW capacities.
Company also designs, supplies, transports and provide the commissioning of EVH (Extra High Voltage) lines of substation, cooling tower pipelines, large diameter piping, bunker belts, steel flu can, transformer sub stations and allied works, as well  as the EPC (Engineering, procurement & construction) contract for fuel oil system.
Company also has 100000 TPA steel fabrication capacities and specializes in building steel structures for thermal power plants and has also established 100000 TPA of equipments installation capacity in power plants.
Company has strong order book of Rs 1145 crore. 75% of the orders are from thermal power generation, 7% from steel sectors, 4% from hydro power plants, and 12% from EPC and remaining from others.
Company is making sugar mill in Maharashtra. Sugar mill will have the capacity of 6000 TCD. 30 MW cogeneration plant will also be coming with the sugar mill. The whole project is expected to be completed by December 2009.
Sunil Hitech is selected as highest bidder for coal mine in JV with Maharashtra State Mining Corporations.

PROMINENT CLIENTS:
BHEL
TATA
TAMIL NANDU ELECTRICITY BOARD
STERLITE INDUSTRIES
SKODA EXPORTS
EIL
HINDALCO
JSPL
JSW
NTPC
RELIANCE ENERGY
PUNJ LLOYDS

INVESTMENT RATIONAL:
Order book position is expected to increase in the coming quarter.
Favorable policies of the government in the form of higher returns on equity will benefit the company.
Its subsidiary Sunil Hitech Engg &Mfg Pvt ltd which manufactures boilers pressure parts is expected to see high demand growth.
 Increase in investment in power sector will see the order book increasing.
Company’s sugar mill and power plant will see increase in top line and bottom line in Q4FY2010.
Company is the highest bidder for coal mines in JV with Maharashtra State Mining Corporations.
It supplies boiler pressure parts to BHEL. BHEL order book stands at somewhere around Rs 80000 crore, so company is expected to benefit from BHEL.
Company has high profile clients like BHEL,L&T,EIL, Sterlite Ind.

RISK:
Investment in non core business like sugar, coal mining could hamper the focus on the core business.
The much needed cash is taken out to move into non core business. The non core business will take some time to return the invested cash.
Delay in the execution of the projects.
Rise in the prices of the raw material could dent the profitability of the company.
Payment delay by the clients even after the completion of the project.

PRODUCT MIX:


PRODUCT

SALES(In Crore)

% OF THE TOTAL

PROJECT MGMT&PROCESS EQPT

Rs 584 crore

97.64%

Boilers

Rs 8.7 crore

1.45%

Tubes

Rs 2.65

0.44%

Steel

Rs 0.81

0.13%

Seamless Tubes

Rs 0.53 crore

0.08%

Coal

Rs 0.4 crore

0.06%

Others

Rs 0.33 crore

0.05%

Tubes

Rs 0.24 crore

0.04%

Electrodes

Rs 0.02 crore

0.02%

Trading Items

Rs 0.1 crore

0.01%

Pipes

Rs 0.07 crore

0.01%

Economisers

Rs 0.06 crore

0.01%

Other Components

Rs 0.03 crore

0

Boilers

Rs 0.01 crore

0

Outlets

Rs 0.01 crore

0

 

SHAREHOLDING PATTERN:

 

 

NO. OF SHARES

%OF TOTAL

PROMOTER

6530990

 

53.20%

 

INSTITUTION

746434

 

6.08%

 

GENERAL PUBLIC

4997736

 

40.72%

 

GRAND TOTAL

12275160

 

100%

 

 

FINANCIAL:

 

 

31/03/06

31/03/07

31/03/08

31/03/09

TOTAL INCOME

133.18

146.38

308.34

602.42

EXPENDITURE

-119.69

-126.71

-257.78

-529.49

PBDITA

 

13.49

19.67

50.56

72.93

DEPRECIATION

-2.89

-4.41

-8.6

-16.73

PBIT

 

10.6

15.26

41.96

56.2

INTEREST

 

-2.35

-3.3

-9.04

-21.53

PBT

 

8.25

11.96

32.92

34.67

TAX

 

-2.65

-4.1

-11.29

-10.39

PAT

 

5.6

7.86

21.63

24.28

Key Highlights:
CAGR in Total Income 65.4%
CAGR in PBDITA 75.4%
CAGR in PAT 63.8%

RATIOS:

 

 

31/03/06

31/03/07

31/03/08

31/03/09

EPS

 

4.590164

6.442623

17.72951

19.90164

PBDITA MARGIN

10.12915

13.43763

16.39748

12.10617

NPM

 

4.204836

5.369586

7.014983

4.030411

INTEREST COVER

4.510638

4.624242

4.641593

2.610311

Key Highlights:
EPS grew at CAGR of 63.8% over 4 year period from Rs 4.5 to Rs 19.9.
PBDITA margin moved up from 10.12% to 12.1%, this shows the increase in operational efficiency.
NPM remained almost flat over the period.
Interest cover down from 4.5 to 2.6.


COMPARISION OF Q2FY2010 WITH Q2FY2009:

 

 

Q1FY2009

 

Q1FY2010

TOTAL INCOME

111.67

75%

 

195.39

EXPENDITURE

-95.01

 

 

-172.39

PBDITA

 

16.66

38.05%

 

23

DEPRECIATION

-3.04

 

 

-4.77

PBIT

 

13.62

 

 

18.23

INTEREST

 

-3.86

 

 

-5.41

PBT

 

9.76

 

 

12.82

TAX

 

-3.37

 

 

-4.36

PAT

 

6.39

32.40%

 

8.46

Key Highlights:
Total Income of Q1FY2010 increased by 75% on YoY basis.
PBDITA of Q1FY2010 increased by 38% on YoY basis.
Net Profit of Q1FY2010 increased by 32.4% on YoY basis.


VALUATION & OUTLOOK:
The main trigger for the company is the increase in the order book. We believe the bad phase of the company is over and good things are going to be reflected in the price sooner. Historically it is trading at very low PE.
At CMP of Rs 185 stock is trading at 9X to trailing twelve month earning, where as industry average is somewhere around 23X. We value the company at 18X, discount to its peer; the fair value comes at Rs 342.

CONCLUSION:
The stock has good upside potential with downside risk very low at this point. The risk reward ratio is very favorable. Investor with 6-8 month investment horizon can take position on the counter.

 

 

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