CMP = Rs 563
Price target: Rs 673
Key points:
- Genus Power Infrastructures Ltd (GPIL) reported a 27.4% growth in the revenues. The meters sales continue to be robust, however the project sales were deferred due to rising input costs.
- The operating profit grew by 75.9% yoy to Rs 35.1 crore. The operating profit margin (OPM) reported a sharp 500-basis-point improvement to 18.1% on the back of a steep decline in the other expenses. The other expenses as percentage of sales decreased to 2.5% from 11.7% in Q4FY2007.
- The interest cost was up 12.4% to Rs 4.4 crore, while the depreciation charge rose by 107.5% to Rs 1.4 crore. Aided by better-than-expected operating performance the net profit of the company reported a growth of 102.1% to Rs 25.5 crore.
- The current order book of the company stood at Rs 417 crore with close to 60% coming from the meters business. The company was also the lowest bidder for orders worth Rs 450 crore. GPIL is a leading manufacturer of electronic energy meters. The company is well poised to benefit from the government's plan to spend on the country's power transmission and distribution sector.
- At the current market price, the stock trades at 11.6x its FY2009E and 8.9x its FY2010E earnings.
- I recommend buy call on this stock with price target of Rs 673.
