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Tecpro Systems (TPRO)
Industrials
Strong operations continue but balance sheet deteriorates further. Tecpro
continued strong operations with revenue growth of 52% yoy (on execution of existing
backlog) and net PAT of Rs86 bn, up 66%. However, balance sheet took a further hit
on higher debt (Rs10.2 bn at end-1HFY12, up Rs2.75 bn from FY2011-end levels) and
deteriorating working capital (to over 200 days of sales). Order inflows (of Rs13 bn in
FY2012E so far) remains broadly at par with our full-year estimates. Retain ADD.
Strong results continue with 52% revenue growth and margin expansion; PAT at Rs86 bn, up 66%
Tecpro reported strong 2QFY12 revenues of Rs4.5 bn, registering a 52% yoy growth likely on
execution of existing backlog. EBITDA margin also recorded a sharp expansion by about 200 bps
yoy to 11.3% from 9.4% in 2QFY11. The margin expansion was led by lower employee and other
expenses as a percentage of sales. Tecpro reported a net PAT of Rs86 mn in 2QFY12, significantly
higher than 2QFY11 net PAT of Rs52 mn. Note that Tecpro’s business is considerably back-ended
in nature with about 50% of revenues and over 75% of profitability registered in the last quarter.
Rising debt levels (to Rs10.2 bn) on high working capital requirements - a key concern
Tecpro reported a gross debt of Rs10.2 bn at end-1HFY12, Rs2.75 bn higher than FY2011-end
levels of Rs7.5 bn. The sharp rise was led by higher working capital requirement for execution of
the large BoP orders. This remains a key concern, especially in a rising interest rate environment.
Net working capital further deteriorated to about 220 days of sales (on trailing four quarter
revenues) versus 172 days at end-FY2011. We believe that these debt levels would continue for
the remainder of the year and expect the company to end the year with working capital of about
200 days. High debt levels reflected in a sharp rise in interest cost to Rs400 mn, significantly higher
than 2QFY11 interest cost of Rs217 mn and up by 21% sequentially from Rs330 mn in 1QFY11.
Inflows keep pace with estimates; maintains strong revenue and order inflow growth guidance
Tecpro reported 2QFY12-end backlog of Rs44.4 bn and inflows of Rs8.7 bn in 1HFY12. Including
the Rs4 bn NTPC order won in October 2011, Tecpro has won orders to the tune of Rs13 bn in
FY2012E so far - broadly at par with our full-year inflow estimate of Rs33-35 bn. The company has
maintained its aggressive revenue and order inflows growth guidance of 35-40% in FY2012E.
Revise estimates and target price to Rs250/share; retain ADD
We revise our estimates to Rs29.9 and Rs31.5 from Rs29.4 and Rs32.7 for FY2012E and FY2013E
on (1) higher inflow estimates for material handling segment on track record so far, (2) higher
debt levels and (3) slightly higher margin estimates for FY2012E. Retain ADD with a revised TP of
Rs250 (from Rs300) on revision of estimates and value at 8X FY2013E EPS (versus 9X earlier).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Tecpro Systems (TPRO)
Industrials
Strong operations continue but balance sheet deteriorates further. Tecpro
continued strong operations with revenue growth of 52% yoy (on execution of existing
backlog) and net PAT of Rs86 bn, up 66%. However, balance sheet took a further hit
on higher debt (Rs10.2 bn at end-1HFY12, up Rs2.75 bn from FY2011-end levels) and
deteriorating working capital (to over 200 days of sales). Order inflows (of Rs13 bn in
FY2012E so far) remains broadly at par with our full-year estimates. Retain ADD.
Strong results continue with 52% revenue growth and margin expansion; PAT at Rs86 bn, up 66%
Tecpro reported strong 2QFY12 revenues of Rs4.5 bn, registering a 52% yoy growth likely on
execution of existing backlog. EBITDA margin also recorded a sharp expansion by about 200 bps
yoy to 11.3% from 9.4% in 2QFY11. The margin expansion was led by lower employee and other
expenses as a percentage of sales. Tecpro reported a net PAT of Rs86 mn in 2QFY12, significantly
higher than 2QFY11 net PAT of Rs52 mn. Note that Tecpro’s business is considerably back-ended
in nature with about 50% of revenues and over 75% of profitability registered in the last quarter.
Rising debt levels (to Rs10.2 bn) on high working capital requirements - a key concern
Tecpro reported a gross debt of Rs10.2 bn at end-1HFY12, Rs2.75 bn higher than FY2011-end
levels of Rs7.5 bn. The sharp rise was led by higher working capital requirement for execution of
the large BoP orders. This remains a key concern, especially in a rising interest rate environment.
Net working capital further deteriorated to about 220 days of sales (on trailing four quarter
revenues) versus 172 days at end-FY2011. We believe that these debt levels would continue for
the remainder of the year and expect the company to end the year with working capital of about
200 days. High debt levels reflected in a sharp rise in interest cost to Rs400 mn, significantly higher
than 2QFY11 interest cost of Rs217 mn and up by 21% sequentially from Rs330 mn in 1QFY11.
Inflows keep pace with estimates; maintains strong revenue and order inflow growth guidance
Tecpro reported 2QFY12-end backlog of Rs44.4 bn and inflows of Rs8.7 bn in 1HFY12. Including
the Rs4 bn NTPC order won in October 2011, Tecpro has won orders to the tune of Rs13 bn in
FY2012E so far - broadly at par with our full-year inflow estimate of Rs33-35 bn. The company has
maintained its aggressive revenue and order inflows growth guidance of 35-40% in FY2012E.
Revise estimates and target price to Rs250/share; retain ADD
We revise our estimates to Rs29.9 and Rs31.5 from Rs29.4 and Rs32.7 for FY2012E and FY2013E
on (1) higher inflow estimates for material handling segment on track record so far, (2) higher
debt levels and (3) slightly higher margin estimates for FY2012E. Retain ADD with a revised TP of
Rs250 (from Rs300) on revision of estimates and value at 8X FY2013E EPS (versus 9X earlier).
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