ITL net sales and PAT figures grew above market expectations. In Q2FY09, Indotech top
line grew by 27.2% (YoY) to Rs 65.4 crore from Rs 51.4 crore - mainly on account of
higher volumes realized on additional capacity. The profitability of the company surged by 38.4% (YoY) in the same period to Rs 14.2 crore from Rs 10.3 crore, where EPS improved to Rs 13.4 from Rs 9.7.
*The company’s order book as of 10th October, 2008 stands at ~Rs 117 crore
*In Q2FY09, company commissioned a Transformer Tank manufacturing facility at its Kancheepuram plant at a total cost of Rs 3.5 crore.
*The company receives advances against private orders, which alleviate them to cover raw material cost. Further in case of private industrial clients, balance payments are been received at the time of delivery. While in case of SEBs it takes 30-60 days for receiving payment against the deliveries.
*ITL expects more orders to get finalized in the third quarter of the current year
(Q3FY09). Moreover, the company is targeting exports to contribute ~25% to total
revenues in coming years.
At CMP of Rs 219, the stock is trading at 6.0x on FY08 earning of Rs 36.7 and 4.7x
on FY09E earning of Rs 46.8. On back of power reforms, infrastructure investments,
low debt-equity ratio 0.1x, export oriented initiatives and assertive management, BUY with one yr target price of Rs 285+.
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