Salasar Techno En­gi­neer­ing Ltd

(BSE: 540642) (CMP: Rs.289.20) (FV: Rs.10) BY Rahul Sharma

Money Times - - Press Release | Stock Analysis -

In­cor­po­rated in June 2006 and pro­moted by Mr. Gya­nen­dra Agar­wal, Salasar Techno En­gi­neer­ing Ltd (SALASAR) is en­gaged in the man­u­fac­ture of cus­tom­ized steel fab­ri­ca­tion and in­fra­struc­ture so­lu­tions (EPC) for Telecom­mu­ni­ca­tion Tow­ers, Trans­mis­sion Tow­ers & Sub­sta­tion Struc­tures, So­lar Mod­ule Mount­ing Struc­tures and Steel Util­ity Poles. Mr. Alok Ku­mar is the Chair­man & Manag­ing Di­rec­tor of the com­pany. SALASAR pro­vides 360° so­lu­tions by car­ry­ing out en­gi­neer­ing, de­sign­ing, fab­ri­ca­tion, gal­va­niza­tion and de­ploy­ment. Its key prod­ucts in­clude Telecom­mu­ni­ca­tion Tow­ers, Power Trans­mis­sion Line Tow­ers, Smart Light­ing Poles, Mono­poles, Guard Rails, Sub-sta­tion Struc­tures, So­lar Mod­ule Mount­ing Struc­tures and Cus­tom­ized Gal­va­nized and Non-gal­va­nized steel struc­tures. It also pro­vides a host of ser­vices that in­cludes com­plete en­gi­neer­ing, pro­cure­ment and con­trol for projects such as Ru­ral Elec­tri­fi­ca­tion, Power Trans­mis­sion Lines and So­lar Power Plants. SALASAR has 3 (in­clud­ing 1 sub­sidiary unit) state-of-the-art man­u­fac­tur­ing fa­cil­i­ties in Ut­tar Pradesh with a cu­mu­la­tive area of ~1,30,000 square yards that are well-equipped with the lat­est ma­chiner­ies, heavy over­head cranes, mul­ti­ple hy­dra equip­ment and other han­dling equip­ments to

fa­cil­i­tate seam­less man­u­fac­tur­ing process and easy lo­gis­tics. Its av­er­age monthly pro­duc­tion ca­pac­ity stands at 8,000 TPA. It re­cently en­hanced its in­stalled man­u­fac­tur­ing/fab­ri­ca­tion ca­pac­ity from 50,000 TPA to 1,00,000 TPA with the in­stal­la­tion of the new Gal­va­niz­ing Plant at its wholly owned sub­sidiary – Salasar Stain­less Ltd. SALASAR has col­lab­o­rated with Ram­boll a Dan­ish Com­pany and a mar­ket leader in in­no­va­tive de­sign and sup­ply of tower so­lu­tions, for Struc­tural De­sign of Tubu­lar Tele­com Tow­ers. SALASAR has con­sis­tently per­formed well with over 95% of its FY17 rev­enues from the Power and Tele­com sec­tor. It will ben­e­fit from the bur­geon­ing op­por­tu­nity in the Tele­com, Steel and Power sec­tors on the back of master re­forms and gov­ern­ment ini­tia­tives like ‘Power for All by 2019’, ‘Hous­ing for All’, ‘Smart Cities’, ‘Af­ford­able Hous­ing’, etc. SALASAR is a lead­ing player in the Tele­com Tower busi­ness and has sup­plied over 20,000 tow­ers of var­i­ous de­signs of An­gu­lar, Tubu­lar and Hy­brid Ground Based Tow­ers (GBT) and Roof Top Tow­ers (RTT) since in­cep­tion. It has re­ceived the ‘Ap­proved Ven­dor’ sta­tus from PGCIL along with the first or­der for Trans­mis­sion Line Mono­poles. It has also re­ceived its first or­der from a Cen­tral Or­ga­ni­za­tion for Rail­way Track Elec­tri­fi­ca­tion worth Rs.49.5 crore. Over the last 5 years, SALASAR’s to­tal rev­enue/ EBITDA/ PAT have grown at 18%/ 23%/ 40% CAGR to Rs.4162 mn/ Rs.391 mn/ Rs.187 mn in FY17. Dur­ing Q1FY18, its to­tal rev­enue grew 51% to Rs.1251 mn from Rs.828 mn in Q1FY17, EBITDA soared 62% to Rs.123 mn from Rs.76 mn in Q1FY17 and PAT soared 79% to Rs.61 mn from Rs.34 mn in Q1FY17. SALASAR’s FY17 per­for­mance was also com­mend­able. Its EBITDA, PAT, ROE and ROA mar­gins have con­stantly im­proved. Its Debt/Eq­uity ra­tio is also low. With the ad­di­tional 50,000 TPA ca­pac­ity of the Gal­va­niz­ing plant, SALASAR plans to ex­pand its prod­uct port­fo­lio by up­grad­ing its ex­ist­ing prod­ucts and in­tro­duc­ing new ones to main­tain its mar­ket share and en­gage new cus­tomers. At the CMP of Rs.289.20, the stock trades at a P/E of 13.4x on its EPS (TTM) of Rs.21.55. The stock is avail­able at a dis­count com­pared to the In­dus­try P/E of 27.4x, S&P BSE Sen­sex Mid-Cap P/E of 40.1x and Nifty Mid-Cap 150 P/E of 49.2x. There­fore, we have a Buy on the stock with a long-term price tar­get of Rs.650.

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