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.

Ceat, the tyre manufacturing company of the Rs 16,000-crore RPG Group, will double the capacity of the radial unit it has set up in Halol, Gujarat, with an additional investment of Rs 630 crore.

The Mumbai-based company, which is also the fourth largest tyre making company by tonnage in India, will start the operations at the greenfield facility in Halol, where it has already invested Rs 620 crore, by October 1.

"The company's board will meet shortly to approve increasing the capacity of the Halol facility to about 300 tonnes per day from 130 tonnes per day, which will be its initial capacity. An investment of about Rs 630 crore will be required for this", said a senior company executive.

The board will also finalise the ways to fund the expansion plans. The raised funds will also be invested on research and development (R&D) activities, added the executive.

This plant in Gujarat, a substantial production of which will cater to the export market, was earlier supposed to be operational in May this year but due to unspecified internal reasons, the launch plans got delayed by nearly five months.

Ceat's additional capacity will be coming up at a time when automotive manufacturers, especially commercial vehicle (CV) makers such as Ashok Leyland, Mahindra & Mahindra and Tata Motors, are complaining of lack in tyre supply within the industry.

According to sources, the company will eventually ramp up the Halol capacity four times, which could take its total capacity to 600 tonnes per day, depending on the demand.

Plans are afoot to increase the capacity three-fold to 450 tonnes per day in the next three to four years that would require an investment of around Rs 1,500 crore, which includes the investment in the second phase of expansion.

The plant can make 4 million tyres per annum in Phase I, a considerable portion of which will be radials for heavy truck, bus, light truck and passenger cars. This will be ramped up to 12 million tyres per year over the years. About 25-40 per cent of the total production from the Halol plant is marked for the export market.

The company is also expanding its Nashik unit by about 35 tonnes per day, which constitutes 10 per cent of its total capacity. This expansion is expected to be finished by this month.

The Indian tyre market is rapidly changing its focus towards radials from cross ply tyres earlier. Although radials are expensive than cross ply tyres, they are known to be providing better performance such as delivering higher fuel efficiency and better road grip. Radials also last longer than other normal tyres.

The country is 90 per cent radialised in the passenger car segment but the CV segment, such as that of trucks and buses, is only 15-20 per cent radialised. This is primarily because of the lack of interest of tyre makers for the CV industry and reluctance of CV owners to switch to radials due to marginally higher prices.

However, about five to seven per cent of tyre consumers are switching to radials every year. Over the next four years, the domestic tyre market for CVs is expected to be 30-40 per cent radialised, say tyre manufacturers.