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Tuesday, July 6, 2010

Sunil Hitech Engineers - Decent Buy at CMP

About Sunil Hi Tech Engineers

Within a period of 20 years, Sunil Hi Tech Engineers has emerged as one of the leading Project Executor of India in the Power and Infrastructure Sector, mainly dealing with fabrication, erection, testing and commissioning of thermal power plants and also entered in the Steel & Sugar Industries.
At Present the Company is executing 47 live projects at different parts of the country and contributing to the commissioning of 26,070 Mw of Power in the next 2–3 years. An ISO 9001:2000 & OHSAS 18001:2007 Company certified company, Sunil Hi Tech undertakes the erection, testing and commissioning of boilers and auxiliaries of up to 500 Mw capacity, pressure parts, ESP and piping, and structural work in main plant building, bunker bay and miscellaneous structures of up to 660 Mw.

As a result of its efforts to move up the engineering value chain, the company has bagged balance of plant (BOP) power projects from Mahagenco and L&T. The advantage of this move is that the company not only qualifies for BOP contracts of up to 250 MW, it can also eye for large size projects in this segment and garner higher revenues.

Sunil Hitech Engineers: Annual Results 2009 - 2010

For the year ended on 31st March 2010, Sunil Hi Tech achieved the Turnover of Rs 728.43 crore (standalone), thereby registering an Increase of 21.64% over Rs 598.81 crore in the previous fiscal year. Profit before tax (before extra ordinary items) for the financial year ended on 31st March’ 2010 is Rs 53.89 crore which was Rs 20.68 crore in the last fiscal year, thereby registering a significant growth of 160.57%.

As investments in the power sector is gathering pace, there is dearth of companies who can provide engineering services required to build the power plants. Sunil Hitech, which is in the fabrication, erection and commissioning work, has been a key beneficiary of this demand. No wonder, the company currently has an order book of Rs 2,062 crore, which is 3.5 times its 2008-09 revenues and provide visibility for the next two years.

Sunil Hitech’s stock is currently trading at a price of 207 with PE multiple of 10 times which is attractive for a company, which is operating in a growing industry and is expected to report strong growth in earnings over the next two years. Historically, the company’s stock has been trading in the range of 10-22 multiples, hence company stock price is trading at lower side as compared to its current PE.

The gains from an investment in this stock could come from growth in earnings as well as a possible rerating. We believe stock downside is limited and it can appreciate by another 15-25 percent in near term.

Note: The stocks discussed in Saral Gyan through posts are not a part of "Hidden Gems" issue which we recommend to our paid subscribers only. These are just stock specific views by Saral Gyan Team; one must do the due diligence before doing any investment based on our recommendation.