Buy Sunil Hitech; target of Rs 145: Sunidhi Securities

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Sunidhi Securities is bullish on Sunil Hitech Engineers and has recommended buy rating on the stock with a target of Rs 145 in its May 24, 2011 research report.

"Incorporated in 1998, an ISO 9001:2000 & OHSAS 18001:2007 certified Sunil Hi Tech Engineers (SUHE) undertakes the erection, testing and commissioning of boilers and auxiliaries of up to 600MW capacity, pressure parts, ESP and piping, and structural work in main plant building, bunker bay and miscellaneous structures of up to 660MW. SUHE has emerged as one of the leading project executor of India in the Power and Infrastructure sectors, mainly dealing with fabrication and commissioning of thermal power plants and also entered in the steel & sugar industries.  In addition to this, SUHE supplies, transports and provides the commissioning of EHV (Extra High Voltage) lines of substations, CW (Cooling Water) pipelines, large diameter piping, bunker belts, steel flue can, transformers sub-stations and allied works as well as the EPC (Engineering, Procurement & Construction) contract for fuel oil system."

"SUHE came out with an IPO of 34.75 lakhs shares at the price of Rs100 per share in Feb 2006. In January 2008, it successfully raised Rs81 crore at Rs360/share through a QIP offering for the purchase of equipments, expansion of the business as well as investments. Before QIP, in August 2007, SUHE had issued 38 lakhs warrants to promoter group to be converted into shares at Rs146 within 18 months, which was not exercised."

"During Q4FY11, a net loss of Rs4 crore got transformed into a net profit of Rs14.6 crore (YoY). Sales rose by 38% to Rs238 crore. EPS for Q4FY11 stood at Rs11.9. OPM and NPM stood at 17.4% and 6.1% respectively as against 14% and minus 2.3% in Q4FY10. During FY11 net profit rose 44% on 1% higher sales."

"SUHE has successfully established itself in the field of power and infrastructure and now diversification in to other sectors will only be a natural progression. Its foray in to airport infrastructure construction will bring in positive returns and increase versatility in product offering and service. The several projects granted to it stand testimony to its strong market position and quality performance. Also, there are other major projects in the pipeline. SUHE's order book to bill ratio of 2.4x gives strong revenue visibility going forward.  At the CMP of Rs113, the share is trading at a P/E of3.7x on FY12E and 3.3x on FY13E. We recommended Buy with a target price of Rs145 in the medium term," says Sunidhi Securities research report.

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Attachments : SunilHitech_Sunidhi_250511.pdf