Buy Tecpro Systems; target of Rs 375: PINC Research

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Buy Tecpro Systems; target of Rs 375: PINC Research

PINC Research is bullish on Tecpro Systems and has recommended buy rating on the stock with a target of Rs 375 in its August 16, 2011 research report.

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PINC Research is bullish on Tecpro Systems and has recommended buy rating on the stock with a target of Rs 375 in its August 16, 2011 research report.

"Tecpro Systems (TSL) Q1FY12 results were above our expectations. Sales registered 40% YoY growth to Rs3.5bn (PINCe Rs3.1bn). OPM improved by 394bps YoY to 11.8% and bottom line grew by 275% to Rs54mn (PINCe Rs27mn) inspite of higher interest cost. Management remains upbeat on future order inflows."

"Inspite of slowdown witnessed in Q1FY12 in terms of order inflows, management remains upbeat on future order inflows and maintained its guidance of ~30% growth in order inflows in FY12 after considering the current level of enquiries and L1 position. As per the management, all projects under execution are getting executed smoothly with no delay or cost overrun. Management also confirmed that working capital cycle is not expected to increase from current levels going forward. In Q1FY12, revenues witnessed a healthy growth of 40% to Rs3.5bn and OPM improved by ~394bps to 11.8%. Bottom line registered a growth of 275% to Rs54mn inspite of high interest cost which grew by 88% (YoY) to Rs330mn. Slowdown in order inflows (resulting into lack of advances) and lower collections resulted into high debt levels."

"Order inflows were at Rs2bn in Q1FY12 mainly led by steel sector. The order book at end of Q1FY12 stands at Rs42bn with power sector commanding 83% share. Segment wise power BoP contributed 47% to the order book followed by Material Handling at 45% and Ash handling at 8%. We believe power sector will continue to dominate the order book."

"We expect sales CAGR of 29% (FY11-13E). Recent collaboration with AC-Tek, USA for overland conveyor projects and entry into water treatment projects through inorganic route will augur well for the future growth of the company. At CMP, the stock is attractively valued at 7.3x FY13E given strong order book, healthy margins and robust order pipeline. We roll forward our target valuation to FY13 and maintain 'BUY' with a target price of Rs375 (10x FY13E)," says PINC Research report.  

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