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Research
Diamond Power Infrastructure Ltd. - Eastern Financiers
Posted On : 2012-05-22 10:49:13( TIMEZONE : IST )
Company Background
Diamond Power Infrastructure Ltd. (DPIL) provides turnkey services in T&D, manufactures Power Cables upto 550KV, Power & Distribution Transformers upto 220KV, Transmission and Distribution Conductors upto 765KV and Transmission Towers. With more than 100 distributors across 16 Indian states, DPIL sells its products under 'Dicabs' brand and is one of the fastest growing integrated T&D equipment manufacturing and service providing company in the country.
Highlights
- The transmission lines in India are loaded 90% as compared to a global average of 60-65%. For every Re.1 spent on power generation, India spends 0.50 paise on T & D, as compared to the world where this ratio is 1:1. This translates into significant opportunity for players like DPIL in the T&D sector in the future.
- Buoyed by the growth in the transmission and distribution segments, DPIL plans to invest Rs. 753 Cr in the 30-months period beginning April-2013. DPIL plans to expand its conductors manufacturing capacity to 150,500 MT per annum from the current capacity of 50,500 MT per annum, increase its rod manufacturing facility to 122,000 MT p.a. from 32,000 MT p.a.. Put up additional 3 medium voltage cable lines, each with an installed capacity of 2,500 kms which will augment the current capacity of 5600 kms to 12,700 kms.
- The company has invested Rs 50 crore and successfully commissioned its 6.3 MW windmills, purchased from Suzlon Energy, on March 29, 2012 at Jamanwada, Kutch. The mill is expected to serve company's Green Initiative Program and will meet the company's demand of power besides providing tax advantage to the company.
- Despite challenging environment for the whole power sector, DPIL has seen robust inflow of orders. Some recent order win includes an order for supply of 2948 KM Moose Conductor for 400 KV D/C (Quad) Salem (New) - Somanhalli Transmission Line worth Rs.94 Cr, an order worth Rs 48.30 crore for 108 Power Transformers from various customers. etc.
- In FY12, DPIL registered net sales of Rs.1895.12 Cr, up 25% on YoY basis. The net profit for the same period stood at Rs.124.18 Cr, up 12% on YoY basis.
- At CMP of Rs.100.20, the stock trades at 2.46x FY13E EPS. We recommend a "BUY" on the stock with a price target of Rs.163.00, assuming a P/E of 4x FY13E earnings, an upside of 63%, over a period of 12 months.
