Jyoti
Bright prospects
Considering the current order book and growth prospects of the power and irrigation sectors, the company's future remains bright
| Buy | Jyoti |
| BSE Code | 504076 |
| NSE Code | Not listed |
| Bloomberg | JYTI@IN |
| Reuter | JYTI.BO |
| 52-week High/Low | Rs 192 / Rs 66 |
| Current Price | Rs 76 (as on 28th March 2008) |
Established in 1943, Jyoti is a diversified engineering company. The company started with Pumps business. However, it has now diversified to manufacture small & large pumps, (also undertakes large pump turnkey projects), wind generators (and now wind turbines), Hydel Systems, Rotating Electrical Machines, Motors and Switchgears, Electronics & Control Systems and Pro/E Center. The company has technology collaboration with Harrakosan & Co., Japan for wind turbine business.
Pumping up its Pumps and Project division
In Pumps and Project division, the company manufactures the pumps utilized in agriculture and power sectors. So all the pumps right from small horse power (hp) to larger ones are manufactured and are utilsed in irrigation sector, thermal power sector (circulating water pumps), sewage submersible pumps, vertical turbine pumps etc.
The company has its own technology in pumps division and has separate R&D division for upgradation of technology.
Now, the company is expanding into very large pump business which so far only KBL (Kirloskar Brothers) manufacture. These pumps are to be used for Ultra Mega Power Projects (UMPP) and large irrigation projects. The entire civil work of laying and installation of pumps will be partly done by the company and the balance will be outsourced.
For the prestigious Godavari Lift Irrigation Scheme Phase-II order for Rs 255 crore, the company has completed the design activities. The model test for this project was conducted successfully and were also witnessed by representatives of Hindustan Construction Co. Ltd., Nagarjuna Construction Co. Ltd. and the Government of Andhra Pradesh. The company has started its supplies towards this project.
In FY 2007, this Division supplied and erected 6 nos. of 3000 HP Pumps along with other electro mechanical equipment for Lift Irrigation Project by Krishna Bhagya Jal Nigam Ltd., Govt. of Karnataka. With this Project, the company will get pre-qualified in future for many similar projects coming up in the country.
Providing turbo power to its Wind System division
In Wind System division, the company used to manufacture wind generators and supplies them to various players including Suzlon.
However, as part of forward integration, the company is planning to enter into the business of Wind Turbine. The company is already in the business of manufacturing and selling various power generation equipments including Generator for Wind Turbine for many years. Wind Energy Sector is experiencing tremendous boom in India and World-wide. For this Project, the company has entered into agreement with M/s. SETEC, Gmbh, Germany for development of 650 KW permanent magnet based wind turbine. The company has also entered into Technical Collaboration Agreement with M/s Harakosan Co. Ltd., Japan for manufacture of 2 MW permanent magnet based wind turbine in India.
Unlike the traditional induction based technology (Suzlon manufactures wind turbine using this induction based technology), the initial start up power required to run a turbine is less. Also the weight of such turbines is lower, which allows it to rotate faster. In induction based technology the initial power to run the turbine comes from Grid, which is at high voltage. So the permanent magnet based technology is much superior to induction based. Also the other parts such as hub, nasal, blades, converters etc will be initially imported and subsequently manufactured.
The company has entered into technological tieup with Harakosan Co. Japan. To fund its wind turbine manufacturing business, it has issued 11,20.960 equity shares at Rs 104 per share to Harakosan & Co. and 16,75000 shares at Rs 104 to an NRI named R. Marut Patel.
Switchgear division is in top gear
In switchgear division, company manufactures medium voltage switchgear in India. It also has entered a Joint Venture with Sultanate of Oman in Oman and has a manufacturing base at Oman to manufacture switchgear to meet the requirement of Gulf countries. The company has a sister concern which manufactures low-voltage switchgears.
The demand for Medium Voltage Switchgear will continue to grow at faster pace on account of implementation of various Government Power Projects, IPP, CPP etc. Corporatisation of various Electricity Boards have also generated lot of requirements for medium voltage Switchgear and will be in demand in the years to come.
The company mainly exports Switchgear to Sultanate of Oman. As many Electrification Projects are coming up in the Gulf Countries, particularly in Oman, the demand for Medium Voltage Switchgears have increased. Jyoti Sohar Switchgear L.L.C. being the local manufacturer in Oman, is well placed to tap this demand.
Serves to a wide range of industries
It serves the vital sectors of national and international economy such as Power (Thermal, Hydel and Nuclear) generation, Transmission and Distribution, Agriculture, providing irrigation through pumping systems, Water supply and sewerage schemes, Defense-particularl
Healthy order book to result in quantum jump in sales in FY 2008 and FY 2009
The company derives major orders from Govt. Agencies, Electricity Boards, Private Power Projects, Railways, OE etc.
In spite of selective order booking and faster execution of projects, the total order book position of the company as on December 2007 stood at Rs 450 crore as compared to Rs 400 crore in Mar’07. This includes the order of Rs 255 crore of Godavari Lift irrigation scheme order (of the total order of Rs 1900 crore of HCC and Nagarjuna construction, Rs 225 crore is outsourced to the company), which is to be completed by July’08. By Mar’08, it will complete nearly 55-60% of the project and the balance will be in first quarter FY’09.
The company is also in talks with two other states (Karnataka and Gujarat) for such projects and will announce the same once finalised. The company is very optimistic of at least one such project.
Financials
For the quarter ended December 2007, the company registered a solid 69% rise in its revenues to Rs 49.23 crore. PBT rose 531% to Rs 2.02 crore and PAT was up 607% to Rs 1.98 crore.
For the nine month ended December 2007, the company registered 41% rise in its revenues to Rs 120.27 crore. OPM improved by 130 basis points from 11.6% to 12.9% taking OP up by 58% to Rs 15.51 crore. PBT rose 282% to Rs 5.04 crore and PAT was up 312% to Rs 4.94 crore.
Outlook
The company has a credible presence in the Small-hydel sectors and also Lift-irrigation sectors, where a stronger business potential is anticipated. It is also welcome affair, that the investments in new power plants and also irrigation areas are showing an upward trend. A large number of independent Power Companies are coming forward to install new Power Houses in remote areas. These developments are expected to generate more business to company, in the years to come.
In view of overall economic growth and focus of the Government on infrastructure projects and with the present order book position, management is confident that the company is poised for a better performance in the coming years.
In spite of selective order booking, the company has pending orders worth Rs 450 crore (December 2007), which itself demonstrates the confidence the customers have in the company.
With the streamlining operations, overall improved business scenario and healthy order book position, we expect the company to register sales and net profit of Rs 211.40 crore and Rs 11.29 crore respectively for FY 2008. This would mean that in FY 2008, its sales would grow by 45% and PAT would jump by 125%. On equity of Rs 12.69 crore and face value of Rs 10 per share, EPS works out to Rs 8.9. The share price trades at Rs 76. P/E works out to just 8.6. Due to poor market conditions, its share price has fallen from Rs 180 on 1st January 2008 to the current Rs 76, which is close to its 52-week low of 66.
| | 0503 (12) | 0603 (12) | 0703 (12) | 0803 (12P) |
| Sales | 85.10 | 103.87 | 145.78 | 211.40 |
| OPM% | 7.1 | 12.2 | 12.6 | 13.5 |
| OP | 6.08 | 12.71 | 18.30 | 28.45 |
| Other inc. | 0.81 | 0.25 | 0.34 | 0.48 |
| PBIDT | 6.89 | 12.96 | 18.64 | 28.93 |
| Interest | 8.37 | 9.52 | 12.00 | 15.59 |
| PBDT | -1.48 | 3.44 | 6.64 | 13.34 |
| Dep. | 1.58 | 1.4 | 1.44 | 1.71 |
| PBT | -3.06 | 2.04 | 5.2 | 11.63 |
| Tax | -0.12 | 0.29 | 0.18 | 0.35 |
| Deferred Tax | 0.00 | -2.66 | 0.00 | 0.00 |
| PAT | -2.94 | 4.41 | 5.02 | 11.28 |
| EPS* (Rs) | -ve | 3.5 | 4.0 | 8.9 |
| * on current equity of Rs 12.69 crore. | ||||
| Jyoti: Results |
| | 0712 (3) | 0612 (3) | Var. (%) | 0712 (9) | 0612 (9) | Var. (%) | 0703 (12) | 0603 (12) | Var. (%) |
| Sales | 49.23 | 29.06 | 69 | 120.27 | 85.03 | 41 | 145.78 | 103.87 | 40 |
| OPM% | 12.6 | 12.5 | | 12.9 | 11.6 | | 12.6 | 12.2 | |
| OP | 6.22 | 3.63 | 71 | 15.51 | 9.84 | 58 | 18.30 | 12.71 | 44 |
| Other inc. | 0.12 | 0.08 | 50 | 0.33 | 0.22 | 50 | 0.34 | 0.25 | 36 |
| PBIDT | 6.34 | 3.71 | 71 | 15.84 | 10.06 | 57 | 18.64 | 12.96 | 44 |
| Interest | 3.90 | 3.04 | 28 | 9.59 | 7.74 | 24 | 12.00 | 9.52 | 26 |
| PBDT | 2.44 | 0.67 | 264 | 6.25 | 2.32 | 169 | 6.64 | 3.44 | 93 |
| Dep. | 0.42 | 0.35 | 20 | 1.21 | 1.00 | 21 | 1.44 | 1.40 | 3 |
| PBT | 2.02 | 0.32 | 531 | 5.04 | 1.32 | 282 | 5.20 | 2.04 | 155 |
| Tax | 0.04 | 0.04 | 0 | 0.10 | 0.12 | -17 | 0.18 | 0.29 | -38 |
| Deferred Tax | 0.00 | 0.00 | 0 | 0.00 | 0.00 | 0 | 0.00 | -2.66 | -100 |
| PAT | 1.98 | 0.28 | 607 | 4.94 | 1.20 | 312 | 5.02 | 4.41 | 14 |
| EPS* (Rs) | # | # | | # | # | | 4.0 | 3.5 | |
| * Annualised on current equity of Rs 12.69 crore. | |||||||||
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