Hold Technofab Engg; target of Rs 122: Firstcall Research

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Firstcall Research has recommended hold rating on Technofab Engineering with a target of Rs 122, in its April 12, 2013 research report.
 
“Technofab Engineering was incorporated on July 20, 1971 in New Delhi as Technofab Engineering Private Ltd under the Companies Act, 1956 and became a deemed public ltd company in 1956 on January 4, 1989, became a public ltd company pursuant to the enactment of the Companies (Amendment) Act, 2000 and a special resolution passed by Company on June 24, 2002 altered the Certificate of Incorporation to that effect on May 7, 2003. The company undertook various piping projects which enabled to evolve into turnkey piping systems with capabilities in EPC. It developed to expertise especially for engineered heating and storage systems, for low grade fuels, required by oil marketing companies and their customers. An Endeavour to expand more engineered systems to our product portfolio developed capabilities to design and engineer fire protection systems to protect all types of hazards, with a special focus on facilities with medium to high risk ratings such as power stations and oil refineries / petrochemical facilities.”
 
“The company growth expanded the business activities to international market & secured our first overseas project in Kenya, Africa in 1993 has executed projects in Zambia, Ghana and Kenya. The potential opportunities in nuclear power sector, Rural Electrification and Transmission & Distribution, Company made efforts in establishing its credentials as an EPC construction company capable of serving these sectors. The company bagged its first work order in the nuclear power sector and followed by further orders in 2008. So far Company has secured and is executing orders worth over Rs. 13,000 lakhs. Technofab also do retrofitting of bulk material flow aid devices for the Cement, Power, Steel, Fertilizer and related industries. In the year 2009, and secured first order in Power Distribution from WBSEDC worth Rs.3,770 Lakhs.”
 
“Techno Fab Engineering Ltd engineering and construction Company, serving the Power, Industrial and Infrastructure Sectors reported its financial results for the quarter ended 31st December, 2012. The Third quarter witnesses a healthy increase in overall sales and moderate decline in profitability of the company. The company net profit declines to Rs. 64.03 million against Rs. 86.24 million in the corresponding quarter ending of previous year, a decrease of 25.75 percent. Revenue for the quarter rose 8.79  percent to Rs. 1050.60 million from Rs. 965.67 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs. 6.10 a share during the quarter, registering 25.75  percent decrease over previous year period. Profit before interest, depreciation and tax is Rs. 1050.60 millions as against Rs. 965.67 millions in the corresponding period of the previous year.”
 
“At the current market price of Rs 111, the stock P/E ratio is at 3.87 x FY13E and 3.09 x FY14E respectively. Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.28.71 and Rs.35.93 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 17 percent and 13 percent over 2011 to 2014E respectively. On the basis of EV/EBITDA, the stock trades at 1.92 x for FY13E and 2.61x for FY14E. Price to Book Value of the stock is expected to be at 0.57 x and 0.48 x respectively for FY13E and FY14E. We recommend ‘HOLD’ in this particular scrip with a target price of Rs 122 for medium to long term investment,” says Firstcall Research report.

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