Subscribe to Transformers & Rectifiers IPO: Networth
Networth Stock Broking has come out with research report on Transformers and rectifiers IPO. The firm has recommended subscribing to the issue.
Transformers and Rectifiers (India), manufactures wide range of transformers ranging from power generation, transmission, distribution transformers etc, has opened for subscription with an initial public offering of 29,95,000 equity shares of Rs 10 each for cash at a premium to be decided through a 100% book-building process.
The issue will close on December 12, 2007. The price band is between Rs 425 and Rs 465 per equity share.
Networth Stock Broking report on Transformers and rectifiers IPO
Company Background
Transformers and rectifiers (India) (TRIL) is one of the leading players in manufacturing power generation transformers, distribution transformers, industrial transformers and a range of specialty (furnace) transformers. The company has developed in-house facility to design and manufacture a wide range of transformers. The company currently manufactures transformers up to 220kV capacity, and has an installed capacity of 7,200 MVA transformers per annum. The manufacturing facilities of the company are situated at Changodar and Odhav in Ahmedabad.
n FY2007, TRIL acquired Transformers and Rectifiers (India) Ltd, a proprietorship concern of the promoter manufacturing transformers. To further incorporate operations, TRIL acquired stakes in Transweld Mechanical Engineering Works Limited and Transpares Limited, which were promoter group companies manufacturing transformer tanks and core channels, and pressed steel radiators. The companies main clients include SEBs (State Electricity Boards) and Industrial in the same ratio.
Strong Order Book
The company has an order backlog of Rs 3600 million, which will be executed over next 8-9 months. Out of the current orders, 1100mn-worth of orders are for industrial clients while the remaining are for SEBs.
Investment Positives
Wide Range of Products
TRIL manufactures entire range of transformers, which includes power generation transformers, Distribution transformers, and furnace transformers etc. The company has a wide product portfolio including certain speciality transformers, which helps it to cater to diverse clients.
Largest manufacturers of furnace transformers
TRIL is one of the largest manufacturers of furnace transformers and holds a niche position in the space. These include arc furnace transformers, submerged arc furnace transformers, ladle furnace transformers, induction furnace transformers and DC arc furnace transformers. Revenues from furnace transformers have risen to Rs28.8 crore in FY2007 from Rs 20.5 crore in FY2005.
In-house design and engineering for all products
The company has developed in-house design and engineering facility, which helps company to enjoy significant cost advantage compared to other players. Acquiring stakes in two companies has helped TRIL in giving timely and cost-effective access to critical raw material components used in transformer manufacturing like transformer tanks, core channels and pressed steel radiators.
Valuation
At the upper price band of Rs465, the company is valued at 24x (on fully diluted equity) its annualized EPS of Rs19. The valuations are justified by the high revenue and earnings growth expected over the next two years on account of a strong order book position as well as a significant ramp up in capacity from 7,200MVA in FY08 to 23,200MVA in FY09. We recommend a subscribe on the issue.
Transformers and Rectifiers (India), manufactures wide range of transformers ranging from power generation, transmission, distribution transformers etc, has opened for subscription with an initial public offering of 29,95,000 equity shares of Rs 10 each for cash at a premium to be decided through a 100% book-building process.
The issue will close on December 12, 2007. The price band is between Rs 425 and Rs 465 per equity share.
Networth Stock Broking report on Transformers and rectifiers IPO
Company Background
Transformers and rectifiers (India) (TRIL) is one of the leading players in manufacturing power generation transformers, distribution transformers, industrial transformers and a range of specialty (furnace) transformers. The company has developed in-house facility to design and manufacture a wide range of transformers. The company currently manufactures transformers up to 220kV capacity, and has an installed capacity of 7,200 MVA transformers per annum. The manufacturing facilities of the company are situated at Changodar and Odhav in Ahmedabad.
n FY2007, TRIL acquired Transformers and Rectifiers (India) Ltd, a proprietorship concern of the promoter manufacturing transformers. To further incorporate operations, TRIL acquired stakes in Transweld Mechanical Engineering Works Limited and Transpares Limited, which were promoter group companies manufacturing transformer tanks and core channels, and pressed steel radiators. The companies main clients include SEBs (State Electricity Boards) and Industrial in the same ratio.
Strong Order Book
The company has an order backlog of Rs 3600 million, which will be executed over next 8-9 months. Out of the current orders, 1100mn-worth of orders are for industrial clients while the remaining are for SEBs.
Investment Positives
Wide Range of Products
TRIL manufactures entire range of transformers, which includes power generation transformers, Distribution transformers, and furnace transformers etc. The company has a wide product portfolio including certain speciality transformers, which helps it to cater to diverse clients.
Largest manufacturers of furnace transformers
TRIL is one of the largest manufacturers of furnace transformers and holds a niche position in the space. These include arc furnace transformers, submerged arc furnace transformers, ladle furnace transformers, induction furnace transformers and DC arc furnace transformers. Revenues from furnace transformers have risen to Rs28.8 crore in FY2007 from Rs 20.5 crore in FY2005.
In-house design and engineering for all products
The company has developed in-house design and engineering facility, which helps company to enjoy significant cost advantage compared to other players. Acquiring stakes in two companies has helped TRIL in giving timely and cost-effective access to critical raw material components used in transformer manufacturing like transformer tanks, core channels and pressed steel radiators.
Valuation
At the upper price band of Rs465, the company is valued at 24x (on fully diluted equity) its annualized EPS of Rs19. The valuations are justified by the high revenue and earnings growth expected over the next two years on account of a strong order book position as well as a significant ramp up in capacity from 7,200MVA in FY08 to 23,200MVA in FY09. We recommend a subscribe on the issue.
Comments
Post a Comment