Buy Sujana Towers; target of Rs 170: Anand Rathi

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Buy Sujana Towers; target of Rs 170: Anand Rathi

Anand Rathi has recommended buy rating on Sujana Towers with a target of Rs 170, November 23, 2007 report.

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Anand Rathi has recommended buy rating on Sujana Towers with a target of Rs 170, November 23, 2007 report. "Sujana Towers is in manufacturing of Power Transmission towers as well as Telecom Towers. At present 60% capacity is used for Power while 40% is for Telecom towers. Company also manufactures heavy structurals for railway electrification work, which also has good demand and potential. The overall capacity of Towers in 2006 was only 28,000 MTs, which was raised to 1,28,000 MTs by the end of March'07. Company is implementing further expansion of 1 Lakh MTs at Chennai, which will be over by June'08 [raising total capacity to 2,28,000 MTs], mainly funded by debt. Recently in Oct.'07, company issued 80 Lakh preferential warrants to promoters, converible in to equity in 18 months at not less then Rs 135 per share. The amount so raised will be utilised in expansion or debt repayment. In this business, the delivery schedule adherence is most important and critical, so most of the companies won't carry large order books, the order are taken for shorter periods of 1-3 months and cycle of execution and order intake continues. Almost all the telecom companies are clients of company, similarly all major turnkey players in power transmission business procures towers from company. Looking to the expansion in capacities and growth potential in Power transmission, Telecom and Railway electrification, the company is likely to post significant growth in coming couple of years. Stock is available at 7X expected '09 earnings, which is quite attractive looking to peer valuations in this sector. BUY" says Anand Rathi research report.

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