Indo Asian Fusegear - Rs.93.00

Indo Asian Fusegear Ltd., incorporated in 1984 as a private limited company and converted into public limited in 1991, manufactures a wide range of high quality electrical control & protection products. They include electrical safety devices such as miniature circuit breakers, residual current circuit breakers, HRC fuses, transformers, switchgears wires & wiring accessories, industrial plugs & sockets, contractors relay, distribution boards etc. It has also diversified into the high-tech energy-efficient lighting field manufacturing the ‘Ecolite’ brand of compact fluorescent lamps and light fittings. The company has technical & commercial collaborations with some leading German & Italian manufacturers. The boom in power, housing, hotels, malls, commercial complexes and the construction industry in general translates into increased demand for electrical distribution & safety equipment. Since India is increasingly recognised as a low cost international quality manufacturing base, outsourcing represents an attractive opportunityfor the company. Accordingly, it has entered into an agreement with UK / Europe based companies for export of power distribution equipment like distribution boards, MCBs, RCDs etc., which are used in the construction sector. It has also contracted to export circuit protection equipment

It has five modern and state-of-the-art manufacturing units located in northern India and has a wide distribution network spread all over India. Its clientele include leading industrial houses like NTPC, Reliance, IOC, Tata Honeywell, HLL, Bajaj Auto, Ashok Leyland etc. To cater to the increasing demand, the company is expanding its Himachal Pradesh unit. It has good capex plans and will invest Rs15~20 cr. over the next 2 yrs for expanding capacities of the existing plants. The company also plans to manufacture and market remote reading meters to meet the emerging opportunities. To consolidate operations and increase its market share in Europe, the company has approved a reverse merger with its group company Indo Kopp Ltd., which is a debt free and profitable company.

Due to its various initiatives, its operating margin has doubled to 17 per cent in FY05 compared to 8.50 per cent last year. Net Sales grew by 87 per cent to Rs55.75 cr. and NP zoomed to Rs5.70 cr. from Rs0.30 cr. last year. Considering the orders pouring in and the export growth potential, it can clock a turnover of Rs135 cr. and earn NP of Rs14 cr. for FY05 recording an EPS of Rs14. Although in the T2T segment, the scrip has appreciated smartly in the last few days but is still trading reasonably cheap at PE of 6~7. It can give 50 per cent returns in next 12 months even from the current level. Long term investors can expect more since the company could register an EPS of more than Rs20 for FY06.