Techno Electric can test Rs 250: SP Tulsian

Tulsian told CNBC-TV18, "Techno Electric is largely an EPC player into the power sector plus they are catering to the oil refineries and the petrochemical sector also. But there main focus has been more as an EPC player into the power sector and their clienteles include ABB, BHEL and NTPC. In fact all the power equipment makers because they hire this company, has an EPS player because since those companies do not have the divisions of carrying out the EPC activity so this company has that advantage."

He further added, "They have the order pipeline of about close to Rs 1400-1500 crore and in fact in the recent past the company has forayed into the power generation also. This is probably the first company which has created a capacity of 100 MW plus in to the wind generation that is the green energy this one. I don’t think that any company has created that kind of capacity in such a short tenure under the REC program. So this company now has a portfolio of about 145 MW because they have created a new capacity of 101 MW. Earlier they had 45 MW of wind generation, so total power generation capacity is 146 MW."

"There debt position is quite within the limit in fact not much pressure is seen and if you take the case of first half performance the topline has grew by about 25%, while the bottomline has grew by about 50%. In fact the EPS which was close to about Rs 20 for FY12 has now seen at close to Rs 15 for first half of FY12 and generally since the earning EPC players are generally back ended because of the execution or completion of the projects in the second half I am expecting the company to report an EPS of over Rs 30 for FY12 as against as I said close to 20 for FY11."

"I think taking all this into consideration the stock looks quite interesting ruling at a PE multiple of close to about 6-6.5 and considering the order pipeline and the order inflows are likely to be received by the company and the contribution to be added by the power generation makes the stock a good buy."

"I am expecting a price of at least about Rs 250 in 6 months time and if somebody can keep a view of 1-2 year, I think this stock has capability to give a return of 20-25% on an annualized basis."

Disclosure: I have no personal holding or interest in the above stock.