Equity Advisory

Are looking for an honest, transparent and independent equity research and advisory? www.intelsense.in is run by Abhishek Basumallick for retail investors. Subscribe for long term wealth creation.

Monday, 25 July 2016

Techno Electric - Powering Ahead

TECHNO ELECTRIC & ENGINEERING COMPANY LTD

The power sector is transforming with large investments in various govt initiatives. T&D is on focus as well as renewable energy sector. The next few years may see a thrust in this business.

T&D INDUSTRY

  • India's energy consumption has nearly doubled since 2000

  • Power demand in India is expected to grow from 120 GW to 315-335GW by 2017 - as per McKinsey study.
  • Coal availability will increase with coal mines leases renewed and forest clearances granted. 10 mines are to be added by Mar 2016.
  • The government is expecting an investment of about US$ 250 billion by 2020. Renewables are set to get US$ 100 billion, while the transmission and distribution segment will get US$ 50 billion, each. Another US$ 60-70 billion will be for power generation, including for restarting stalled projects and for new ones while US$ 5-6 billion is set aside for energy efficiency projects. Besides, US$ 20-25 billion investments would come for associated infrastructure required in replacement of old and out-dated equipments, among others.
  • Key focus area is integration of renewable energy to the grid
  • Discoms have an accumulated loss of 3.8 lakh crores and debt of 4.4 lakh crores (as of Mar 2015)
  • UDAY scheme entails the state govts to take over the debt and future losses (in a staggered manner) from the Discoms
  • Government plans to roll out green energy corridor’ project at an estimated cost of INR 43000 cr to facilitate the flow of renewable energy into the National Grid.



  • Renewable power has been declared as a priority sector for bank lending from 2015
THE COMPANY

  • Leaders in EPC contracting in power sector
  • Spread across entire power sector value chain - generation and T&D
  • Co's forte is 765KV substation projects besides distribution projects
 


  • 215 cr is the sale proceed for 44.45 MW. 4.83 cr / MW sale price. 162.9MW of wind power capacity remaining.
  • Promoter has 58% stake in the company
  • Mutual funds hold 17.2% and FIIs 5.4%
  • The co is involved with more than 50% of both NTPC and Power Grid's projects; it has relationships with 1500+ vendors
  • One of the first few T&D contractors, who have teamed up with Chinese player Rongxin to participate in STATCOM projects. Have first mover advantage in STATCOM space in India.
  • Govt plans to install 50 STATCOMs in the next 3-5 years with a total spend of 8000 cr.
  • In 2013, the Patran transmission project was completed completely on supplier credit
  • EPC division produces 92% of the revenues
  • Co has a working capital cycle of 35 days vs 66-182 days of competitors
  • The Ministry of Power has planned to provide electricity to 18,500 villages in three years under the Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY).
  • A few Ultra Mega Power Projects of about 4,000 MW capacity each are in the offing
  • Power Grid Corporation of India is to build sub transmission system of 220/132kV in 6 North East States at an estimated investment of Rs 15000 cr over a period of 3 years. Already bagged order to the tune of Rs 170 Crores to build 400 kV GIS substation at Assam under World Bank funded NER Power System Improvement Project.
  • Got an order worth Rs 600 cr for substation package at Chittorgarh, Tuticorn, Ajmer and Bikaner associated with Green Energy Corridors: Inter-state Transmission Scheme (ISTS)
  • Order book at end of Mar 2016 is 2,600 cr, 69% of which is from PGCIL
  • Co has a zero penalty record resulting in realization of retention money within 6 months of project completion
  • During 2015-16, around 28,000 ckm (circuit kilometre) of transmission lines were commissioned against 22,000 ckm last year. This is 118% of the annual target set and also the highest ever for a single year.

DISCLOSURE: I currently hold the stock.

No comments:

Post a Comment