TECHNOFAB ENGG LTD
Cmp 162 market cap 170 crores.
Technofab engineering is an EPC company involved in turnkey projects for the power, infrastructure and industrial sectors. Its main area of work is in balance of plant space. (BOP)
The projects taken up fall in the following broad categories
· Industrial, Utility and Low Pressure Piping Systems
· Fuel Oil, Unloading, Storage and Handling Systems
· Fire Detection, Alarm and Protection Systems
· Water, Wastewater and Effluent Treatment and Recycling Systems.
· Tankages
· Raw / Sea Water Intake Systems
· Plant Electrification / Transmission & Distribution / Rural Electrification
CUSTOMER LIST
· Power Sector - NTPC / BHEL / LANCO / SEB’s / DVC / Reliance / ABB / Siemens / Alstom
· Nuclear Power - NPCIL
· Industrial Sector - NALCO / SAIL / RINL / NMDC / NFL / Maruti / IFFCO
· Oil & Gas - TEMA Oil Refinery / GAIL / IOC
· Water Systems and Water Treatment - Municipalities / NBCC / World Bank / ADB / AFDB aided Projects
FINANCIALS
Equity capital is 10.49 crores and each share has a face value of Rs 10. Promoter holding as on dec 10 was 38.23% as against 36.8% as on Sep 10 qtr. Even during last qtr of fy 11, the promoters have been buying from open market through creeping acquisition.
As on dec 10, fii holding was 13%.
The company had come out with an IPO in fy 10 at a price of 240. As on Dec 2010, the company had unutilised amount of 44 crores out of total proceeds of 71 crores.
Company has low debt all throughout the last few years.
Last few years results
| Year | 05 | 06 | 07 | 08 | 09 | 10 | 9mfy10 | 9mfy11 |
| Sales | 50 | 54 | 61 | 81 | 149 | 200 | 112 | 166 |
| OP | 1.9 | 2.74 | 3.13 | 9.9 | 22.27 | 33.76 | 17.38 | 25.5 |
| Int | 1.5 | 2 | 1.6 | 1.6 | 3.24 | 3.17 | 2.27 | 2.81 |
| NP | 0.28 | 0.48 | 0.79 | 5.31 | 11.7 | 19 | 10 | 15 |
Order book as on Nov 2011 was around 780 crores which gives strong revenue visibility for the next 2-3 years.
POSITIVES:
1. The company has shown stellar growth in sales and net profits especially from fy 08. Over fy 06 to fy 10, turnover has grown at CAGR of 39%, EBIDTA at 87% and Adj Net profit at 148%.
2. Healthy order book giving revenue visibility for next 3-4 years.
3. Geographical diversification into countries outside India like their foray into Ghana, Zambia etc. Margins from exports are expected to be higher as compared to domestic business.
4. Product diversification—The company is continuously trying to broaden its product range like product storage tank, large floating roof, double walled tanks, cryogenic tanks as well as process tanks used in zinc and alumina industries.
5. Low leverage—In a very capital working intensive industry, the company has low leverage as compared to peers.
6. Promoters have been raising their stake since listing through creeping acquisition from the markets.
RISK FACTORS
1. Further growth will require higher working capital to be employed by the company.
2. High client concentration in its order book. Top 5 clients account for around 30-35% of its order book.
3. The usual sector specific risk factors of delayed execution and delayed payment apply to this company.
4. There is some lumpiness to the earnings of the company with March qtr being the best quarter as compared to other quarters.
