Buy Tecpro Systems: GEPL Capital

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Buy Tecpro Systems: GEPL Capital

GEPL Capital is bullish on Tecpro Systems and has recommended buy rating on the stock in its August 17, 2011 research report.

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RELATED NEWS Buy Jain Irrigation; target of Rs 195: A C Choksi Buy Indraprastha Gas; target of Rs 450: A C Choksi Buy Anant Raj Ind; target of Rs 147: Sushil Finance ALSO READ See previous views by GEPL Capital See what other Experts & Brokerages are saying about Tecpro Systems See messages about Tecpro Systems Tecpro Systems BSE | NSE 29/05/12 Are Mutual Funds betting on Tecpro Systems?

GEPL Capital is bullish on Tecpro Systems and has recommended buy rating on the stock in its August 17, 2011 research report.

"Tecpro is a mid-sized BoP player with both products as well project portfolios in the power BoP space and despite the competition there are enough government projects for such players. In conjunction to that company has a healthy back log and has constantly improved its margins with more then decent growth in revenues. We like the company because it is in a high growth phase and is continuously building up along the value chain to enhance its offerings. Our preliminary prognosis, though on a conservative side to the consensus, suggests an EPS of Rs 31 for FY12E & Rs 36 for FY13E. Based on this; at the CMP of Rs 270, the company is trading at 7.5 times its FY13E earnings."

"Tecpro system's Q1FY12 results were above consensus estimates, company reported sales at Rs 3.5bn for Q1FY12; a growth of 40% YoY. EBITDA & PAT came in at Rs 413mn & Rs 54mn; a growth of 110% & 275% YoY, respectively. The EBITDA margin & PAT margin were also up at 11.8% & 1.5% for Q1FY12 by 390 bps & 90 bps respectively. The EBITDA margin expansion was partly driven by boost in sales and partly due to decline in raw material cost as a percentage of sales. The sales growth pulled up PAT & PAT margin as well, even though interest out go almost doubled. Slow down in order inflow and hence lesser advances caused debt levels to increase which in-turn resulted in interest expenses to rise by 88% YoY for Q1FY12. Order inflow was subdued at Rs 2bn for Q1FY12 but was in line with the broader engineering sector. The OB stands at Rs 42.2bn, and considering how poorly the sector has faired in past one year, it can be deemed healthy at 2.2X FY11 sales."

"In line with the other peers of Tecpro we have attach a multiple of 9X to its FY13E EPS to reach a target price of Rs 325. We recommend a buy rating on the stock. We are also due to speak with management in the near term and would come out with a more detailed update afterwards," says GEPL Capital research report. 

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To read the full report click on the attachment