Patels Airtemp India Cluster: Emerging Star Recommendation: Buy Price target: Rs135 Current market price: Rs61
In line with expectations
Result highlights
Patels Airtemp's Q4FY2008 results are in line with our expectations. The net sales for the quarter rose by 65% to Rs18.23 crore.
Currently, the company has an order book of Rs50 crore out of which Rs13 crore is for exports.
The operating profit margin for the quarter stood at 18.8%, down 220 basis points year on year (yoy). Consequently, the operating profit grew by 47.4% to Rs3.43 crore during the quarter.
The interest cost was a little higher due to higher working capital requirements, as the profit after tax grew by 62.9% to Rs1.55 crore.
For the full year, the company has reported a top line growth of 31.9% and a net profit growth of 105.9% to Rs5.21 crore. The company has recommended a final dividend of 10% in addition to the interim dividend of 5%, making the total dividend for FY2008 a good 15%.
We introduce our FY2010 estimates in this note. We expect a top line growth of 16.1% to Rs87.1 crore and earnings of Rs17.5 during the fiscal. At the current market price, the stock is available at 4.1x FY2009E earnings and 3.5x FY2010E earnings. We maintain our Buy recommendation on the stock with a price target of Rs135, valuing the company at 9x FY2009E earnings.
VIEWPOINT
Sujana Towers
Towering growth Sujana Towers is a tower manufacturing company catering to tower requirements of power, telecom and railways sectors. With an installed capacity of 128,125 tpa the company manufacturer towers up to 400 kilo volt (kv) rating lines. In order to further expand its product portfolio, the company has introduced 765kv towers and is awaiting approval from Power Grid Corporation of India for the same. The company currently derives 60% of the revenues from the sale of power towers, while the balance comes from telecom towers.
