Hold Tecpro Systems; target Rs 129: Firstcall Research

Firstcall Research has recommended hold rating on Tecpro Systems with a target price of Rs 129, in its March 01, 2013 research report.

"Tecpro started as a material handling company in 2001 and has become a prominent player in Engineering, Procurement and Construction (EPC) of handling systems. Tecpro Systems received an order worth Rs. 139.8 crore from The West Bengal Power Development Corporation Ltd. Tecpro Systems received an order worth Rs. 146.6 crore from Damodar Valley Corporation for the supply of Coal Handling Plant Package for BTPS 'A' Tecpro Systems received an International order worth US $17.4 million from SK Engineering & Construction, South Korea for Paco Power Plant (2X160 MW) in Panama. Tecpro Systems has considered and decided to acquire 100% paid up share capital of Tecpro Ispat Private Ltd. Tecpro Systems Ltd has received order worth Rs. 267.3 crore from Kanti Bijlee Utpadan Nigam Ltd a subsidiary of NTPC Ltd. Tecpro Systems order book position as on 31st Dec, 2012 stood at about Rs. 47.2 billion. Net Sales and Operating Profit of the company are expected to grow at a CAGR of 10% and 9% over 2011 to 2014E respectively.

The company's net profit declines to Rs.50.65 million against Rs.146.82 million in the corresponding quarter ending of previous year, a decrease of 65.50%. Revenue for the quarter decreased 4.19% to Rs.6003.80 million from Rs.6266.54 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs.1.00 a share during the quarter, registering 65.50% decrease over previous year period. Profit before interest, depreciation and tax is Rs.873.02 millions as against Rs.628.48 millions in the corresponding period of the previous year.

Outlook and Conclusion: At the current market price of Rs.115.00, the stock P/E ratio is at 15.44 x FY13E and 14.78 x FY14E respectively. Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.7.45 and Rs.7.78 respectively. Net Sales and Operating Profit of the company are expected to grow at a CAGR of 10% and 9% over 2011 to 2014E respectively. On the basis of EV/EBITDA, the stock trades at 4.63 x for FY13E and 4.40 x for FY14E. Price to Book Value of the stock is expected to be at 0.73 x and 0.70 x respectively for FY13E and FY14E. We recommend hold in this particular scrip with a target price of Rs 129 for Medium to Long term investment," says Firstcall Research report.

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