Buy Numeric Power; target of Rs 300: Sunidhi Securities

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Buy Numeric Power; target of Rs 300: Sunidhi Securities

Sunidhi Securities is bullish on Numeric Power Systems and has recommended buy rating on the stock with a target of Rs 300 in its February 7, 2011 research report.

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Sunidhi Securities is bullish on Numeric Power Systems and has recommended buy rating on the stock with a target of Rs 300 in its February 7, 2011 research report.

"Numeric Power Systems (NPSL) incorporated in 1994 is emerging as Indian MNC having its own seven manufacturing facilities in India (Pondicherry, Chennai and Parwanoo) & Sri Lanka supported by its own subsidiaries in Singapore, Mauritius and partner offices in USA and UK. NPSL, a corporate house with established nationwide presence, is the single largest source for a wide range of UPS systems. Numeric Lanka Technologies Pvt. Limited, Sri Lanka, Numeric Power Systems Pte. Limited, Singapore and Numeric Power Systems (Mauritius) Private Ltd., Mauritius are subsidiaries of NPSL. The company manufactures UPS systems, Constant Voltage Constant Frequency Systems, AC-DC Converters, C-DC Converters, AC Drives, Invertors, Stabilisers, Custom Built Power Conditioners and Isolation Transformers. It offers a wide range of UPS systems ranging from 0-120 kilovolt ampere (KVA)."

"NPSL had tied up with the world's renowned Merlin Gerin Electronics UPS Systems (Schneider Group). With over 40 years of experience in the electrical power industry and active presence in more than 100 countries and over 3000 employees around the world, MGE has 5 manufacturing facilities (two in France, one in USA and two in Asia) and 2 R&D centers (one in Europe and one in the USA). NPL's products find application in various segments of the market, including information technology, telecom, software, healthcare industry, banks and financial institutions, government projects and small-scale industry. NPSL commissioned its new unit for UPS with integrated CNC fabrication facility in Himachal Pradesh - Parwanoo) in February 2010. The modernized sheet metal process plant at Chennai has two fabrication process lines with a fully automated powder coating facility. Fabrication plant has been expanded to accommodate 3- Phase UPS assembly (high energy division)."

"NPSL has added 7 new service centers during FY10 to the existing 228 centers totaling a strong network of 235 locations by 31st March 2010. NPSL is a national distributor for SLA batteries manufactured by Panasonic Industrial Asia Pte Ltd (a member of Panasonic - Japan). This distribution arrangement between NPSL and Panasonic offer the complete range of Panasonic high performance SLA batteries to the Indian market directly and through their appointed channel partners."

 "NPSL already implemented an auxiliary power systems project for Power Grid Corp in the entire north-eastern states, in a turnkey effort involving design, supply and installation of total power conditioning systems. With this, NPSL has elevated itself to an integrated player in power protection systems. NPSL has plans to expand its overseas operations by setting up a UPS assembling facility in Mauritius. NPSL has a dominant position in UPS segment and has clients such as Intel, Infosys, Veritas, Microsoft, Intel, Infosys, TCS, RBI, ICICI, and other MNC groups. In healthcare, it has strong relationships with Siemens and Philips medical systems. Given India's significant power deficits and the ubiquitous outages and voltage fluctuations; NPSL's products have significant market potential in the country."

"The power backup market in India is estimated at Rs 24 billon and growing at an annual rate of 15-20% varying within three different segments. Moreover with increasing power deficit and about 17% of demand supply gap in power generation, the power backup sector is crucial for business continuity of Indian corporates. A widening demand-supply scenario augurs well for the UPS industry."

"NPSL has formed a subsidiary with a strong focus to develop green energy products that will include solar power converters and projects, led lighting solutions and solar energy projects. It continues to plement SPV (Solar Photo Voltaic) projects in India and abroad including Japan, Kenya, Nigeria etc., Numeric has created a strong installed base in the areas of making solar power available towards the Green Energy movement - stand alone and distributed mini grid systems; solar hybrid UPS systems and grid connected solar power systems."

"The sustained top line growth, effective cost-rationalization measures, its capability for executing total turnkey power conditioning systems, its profitable subsidiaries and a market-share of about 20 per cent in UPS give potential earning visibility in the coming years. At the CMP of Rs 245, the share is trading at a P/E of 5.8x on FY11E and 5.1x on FY12E. We recommend BUY with a target of Rs 300 in the medium term," says Sunidhi Securities research report.

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To read the full report click on the attachment