ISGEC Heavy Engg
CMP: Rs 5995
Target: Rs 11445
Isgec’s business activities span across Process Equipment, EPC Power Plants, Boilers, Sugar Plants & Machinery, Mechanical & Hydraulic Presses, Steel & Iron Castings, Contract Manufacturing, and
Trading. The heavy engineering equipments are used in power, cement, automobile, sugar, chemical, steel & alloy casting, oil & gas, pumps & valves, fertilizer industries and defence sector. The Boiler division has ventured into new products such as Heat Recovery Steam Generators, Waste Heat Recovery Boilers and Pin Hole Grate Boilers. The division has also ventured into Repair & Maintenance.
Isgec has its origins in the Saraswati Sugar Mills, which were established in 1933, with a sugarcane crushing capacity of 400 tonnes per day. It has grown into one of India's largest sugar mills and now crushes 13,000 tonnes per day. It is today a subsidiary company. At the time of the nation's independence, the need for an Indian capital goods industry was recognized and Isgec was established in 1946. The initial activity was the manufacture of spares for sugar mills. In the course of its history, the company diversified into a range of engineering products.
During Q3FY15, standalone net profit rose 116% to `37.5 crore on 42% higher sales of During Q3FY15, standalone sales rose 116% to `789 crore. Q3FY15 standalone EPS stands at `51. During 9MFY15, standalone net profit climbed 58% to `103.9 crore on 28% increased sales of `2366 crore. 9MFY15 standalone EPS works out to `140.
The financial results for FY14 were for six months. During this period, sales stood at `1710 crore, which reflects an increase of 15% on an annualised basis. Net profit for the same period stood at `42.2 crore, which reflected an increase of 3% on an annualised basis. Annualised consolidated EPS worked out to `114.
Due to the economic slowdown, some segments of Isgec have large under-utilized capacities and improving business climate would thereby lead to highly profitable operational leverage. Based on the going, Isgec is expected to report an EPS of `290 in FY16 &, which would further go up to `382 in FY17 after the JV will start contributing heavily to the bottom line.
At the current market price of `5995 crore, the share is traded at a forward P/E of 20.7x on FY16E and P/E of 15.7x on FY17E. The reasonable P/E of 30 as it applies to blue chip companies will take the share price to `8700 in the medium term and further to `11445 thereafter on FY17E. This is expected to fetch a decent gain of 90 per cent.
CMP: Rs 5995
Target: Rs 11445
Isgec’s business activities span across Process Equipment, EPC Power Plants, Boilers, Sugar Plants & Machinery, Mechanical & Hydraulic Presses, Steel & Iron Castings, Contract Manufacturing, and
Trading. The heavy engineering equipments are used in power, cement, automobile, sugar, chemical, steel & alloy casting, oil & gas, pumps & valves, fertilizer industries and defence sector. The Boiler division has ventured into new products such as Heat Recovery Steam Generators, Waste Heat Recovery Boilers and Pin Hole Grate Boilers. The division has also ventured into Repair & Maintenance.
Isgec has its origins in the Saraswati Sugar Mills, which were established in 1933, with a sugarcane crushing capacity of 400 tonnes per day. It has grown into one of India's largest sugar mills and now crushes 13,000 tonnes per day. It is today a subsidiary company. At the time of the nation's independence, the need for an Indian capital goods industry was recognized and Isgec was established in 1946. The initial activity was the manufacture of spares for sugar mills. In the course of its history, the company diversified into a range of engineering products.
During Q3FY15, standalone net profit rose 116% to `37.5 crore on 42% higher sales of During Q3FY15, standalone sales rose 116% to `789 crore. Q3FY15 standalone EPS stands at `51. During 9MFY15, standalone net profit climbed 58% to `103.9 crore on 28% increased sales of `2366 crore. 9MFY15 standalone EPS works out to `140.
The financial results for FY14 were for six months. During this period, sales stood at `1710 crore, which reflects an increase of 15% on an annualised basis. Net profit for the same period stood at `42.2 crore, which reflected an increase of 3% on an annualised basis. Annualised consolidated EPS worked out to `114.
Due to the economic slowdown, some segments of Isgec have large under-utilized capacities and improving business climate would thereby lead to highly profitable operational leverage. Based on the going, Isgec is expected to report an EPS of `290 in FY16 &, which would further go up to `382 in FY17 after the JV will start contributing heavily to the bottom line.
At the current market price of `5995 crore, the share is traded at a forward P/E of 20.7x on FY16E and P/E of 15.7x on FY17E. The reasonable P/E of 30 as it applies to blue chip companies will take the share price to `8700 in the medium term and further to `11445 thereafter on FY17E. This is expected to fetch a decent gain of 90 per cent.
