Why are experts, brokerages bullish on Tecpro Systems?

Nifty BSE | NSE 31/05/12 Are Mutual Funds betting on Nifty?

A material handling company Tecpro Systems has entered capital market with an initial public offering of 75.5 lakh equity shares today. The company aims to raise Rs 268 crore at higher end of price band of Rs 340-355 a share.

It is engaged in providing turnkey solutions in material handling, ash handling, balance of plant and engineering, procurement and construction contracts. In material handling solutions business, the company does design, engineer, manufacture, sell, commission and service a range of systems and equipment for the core infrastructure related sectors like power, steel, cement and other industries.

Experts as well as brokerage houses look bullish on this company and recommened subscribing the issue. Investment Advisor, SP Tulsian said one could subscribe even at upper price band of Rs 355 a share and Manish Bhatt of Prabhudas Lilladher said it would definitly give good listing gains, one should subscribe.

Tulsian said, "The business segment of the company has immense potential to grow ahead, in view of huge capacity addition seen in the power sector in 11th Five Year Plan (ending on 31-03-2012) and 12th Five Year plan. Infact, BoP contract, will be a big segment for the company to grow, as evident from one order of Rs. 993 crores having bagged from Chhattisgarh State Power for 500 MW thermal power project. This works out to a value of close to Rs. 2 crore per MW, of a power project."

"It is advised to subscribe the issue, even at the upper price band of Rs. 355 per share. This is likely to give listing gains, but one would be better off, to hold it for 6-12 months," he said.

Also read: Tecpro Systems looks worthy of 10% premium: Udayan

Angel Broking says, "Over the past five years the company has grown at a scorching pace along with successfully entering the BoP-EPC segment. As and when Tecpro begins to accumulate and execute larger size BoP projects going ahead, it will be able to command premium valuations on superior growth and profitability margins. The successful execution of few BoP projects over the next couple of years may also result in Tecpro exploring the feasibility of taking up complete EPC for power plants (ie BTG + BoP), which would place it in league with BGR Energy. We recommend a subscribe view on the IPO."