Buy Skipper; target of Rs 635: ICICI Securities

ICICI Securities research report on Skipper

Skipper’s performance in last 1-2 years reflects pick up in domestic and international T&D capex cycle, enhanced EPC capabilities in infra and T&D and strong volume growth in PVC pipes. This largest Indian manufacturer of T&D structures is set to ride on multi-year opportunity (INR 4.75trn over FY23-27 of domestic T&D capex, INR 9.2trn over FY23-32, according to NEP) and plans to double its engineering capacity to 0.6mn TPA over the next 4-5 years. In addition, the company’s export business may also benefit from its expansion in developed markets. With an orderbook of INR 59bn (1.8x FY24 revenue) and OI likely growing at 20% CAGR over FY24-27E, we expect revenue/EBTIDA/PAT to grow at 25%/29%/56% CAGR. Initiate coverage with BUY and TP of INR 635, based on 27x avg. of FY26E and FY27E EPS.

Outlook

With an orderbook of INR 58.8bn (1.8x FY24 revenue) and expected OI CAGR of 20% over FY24-27, we expect revenue/EBTIDA/PAT CAGR of 25%/29%/56%, respectively. Initiate coverage on the stock with BUY, TP of INR 635 based on 27x average of FY26E and FY27E EPS.

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