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Genus Power Infrastructure -Result highlights
Top line grew by 12.4% : Genus Power Infrastructure Ltd (GPIL)’s Q3FY2011
results were above our expectation on the profitability front. The net revenue
increased by 12.4% year on year (YoY) to Rs150.4 crore, which was in line with
our estimate of Rs152.4 crore. However, the execution of projects is expected
to pick up in Q4FY2011. The management has maintained its outlook of a 20%+
growth in the top line for FY2011.
Robust margin at 16.1%: The operating profit margin (OPM) was robust at
16.1% as the rise in the staff cost and other expenses was offset by the
containment in the raw material expenses. The OPM is likely to be maintained
at ~15%+ level in the coming quarters.
PAT increased to Rs14.4 crore: The interest cost has decreased to Rs6.3 crore.
The profit after tax increased to Rs14.4 crore. Please note that the Y-o-Y growth
looks exponential due to the disruption of operations in the third quarter of
the last year following the devastating fire at its Jaipur plant in October 2009.
Estimates fine-tuned: We have fine-tuned our estimates in view of M9FY2011
results. Now, we are expecting a compounded annual growth rate (CAGR) of
17.3% in the top line and that of 18.1% in the bottom line over FY2010-12.
Accounting for the ~4% dilution in FY2011, the earnings per share (EPS) is
expected to grow at a CAGR of 14% over the same period.
Order book at Rs730 crore: The current order book
of the company stands at Rs730 crore as against Rs745
crore at the end of Q2FY2011. The order inflow during
the second quarter was moderate at Rs140 crore. The
company has been going slow in booking new orders
as it wants to focus on the execution of the current
orders first. The unexecuted orders are equivalent to
1.1x that of FY2010 revenues. The company has already
participated in tenders worth Rs2,050 crore which
would provide future revenue visibility. The company
has maintained that it would go cherry picking for
good-margin orders to sustain the margin at a 15%+
levels in the coming years.
Outlook and valuation: GPIL, a mid-cap company
under our coverage, has a leadership position in the
Indian meter space. In view of its robust execution
record, the huge opportunity in its chosen transmission
and distribution (T&D) niche and its proven execution
capabilities, we believe GPIL can sustain an 18-20%
growth rate in revenues over the next few years; over
the same period its OPM is also likely to remain robust.
At the current market price, the stock trades at 4x
FY2012E EPS while it discounts its historical (FY2010)
book value by 0.9x. In our view, the stock does not
adequately capture the 18.4% CAGR growth potential
in the company’s profits over FY2010-12. We remain
positive and maintain our Buy recommendation on the
stock with a revised price target of Rs27 (6x FY2012E
EPS) on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Genus Power Infrastructure -Result highlights
Top line grew by 12.4% : Genus Power Infrastructure Ltd (GPIL)’s Q3FY2011
results were above our expectation on the profitability front. The net revenue
increased by 12.4% year on year (YoY) to Rs150.4 crore, which was in line with
our estimate of Rs152.4 crore. However, the execution of projects is expected
to pick up in Q4FY2011. The management has maintained its outlook of a 20%+
growth in the top line for FY2011.
Robust margin at 16.1%: The operating profit margin (OPM) was robust at
16.1% as the rise in the staff cost and other expenses was offset by the
containment in the raw material expenses. The OPM is likely to be maintained
at ~15%+ level in the coming quarters.
PAT increased to Rs14.4 crore: The interest cost has decreased to Rs6.3 crore.
The profit after tax increased to Rs14.4 crore. Please note that the Y-o-Y growth
looks exponential due to the disruption of operations in the third quarter of
the last year following the devastating fire at its Jaipur plant in October 2009.
Estimates fine-tuned: We have fine-tuned our estimates in view of M9FY2011
results. Now, we are expecting a compounded annual growth rate (CAGR) of
17.3% in the top line and that of 18.1% in the bottom line over FY2010-12.
Accounting for the ~4% dilution in FY2011, the earnings per share (EPS) is
expected to grow at a CAGR of 14% over the same period.
Order book at Rs730 crore: The current order book
of the company stands at Rs730 crore as against Rs745
crore at the end of Q2FY2011. The order inflow during
the second quarter was moderate at Rs140 crore. The
company has been going slow in booking new orders
as it wants to focus on the execution of the current
orders first. The unexecuted orders are equivalent to
1.1x that of FY2010 revenues. The company has already
participated in tenders worth Rs2,050 crore which
would provide future revenue visibility. The company
has maintained that it would go cherry picking for
good-margin orders to sustain the margin at a 15%+
levels in the coming years.
Outlook and valuation: GPIL, a mid-cap company
under our coverage, has a leadership position in the
Indian meter space. In view of its robust execution
record, the huge opportunity in its chosen transmission
and distribution (T&D) niche and its proven execution
capabilities, we believe GPIL can sustain an 18-20%
growth rate in revenues over the next few years; over
the same period its OPM is also likely to remain robust.
At the current market price, the stock trades at 4x
FY2012E EPS while it discounts its historical (FY2010)
book value by 0.9x. In our view, the stock does not
adequately capture the 18.4% CAGR growth potential
in the company’s profits over FY2010-12. We remain
positive and maintain our Buy recommendation on the
stock with a revised price target of Rs27 (6x FY2012E
EPS) on the stock.
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