Paramount Communication - Rs.142.00

Established in 1978, Paramount Communication Ltd. (PCL) is among the top manufacturers of cables in the country having developed a huge variety of specialised cables and wires required in virtually all the sectors of the economy viz. telecommunication, space research, thermal & nuclear power plants, railways, petrochemicals, fertilizers, steel, electronics and various other industries. It produces the entire range of telecommunication cables including optical fibre cables, foam skin/ solid PE insulated multi-pair/ multi-quad jelly filled cables, aerial cables, telecom installation cables, coaxial cables, drop wires etc. It also manufactures cables for the power and industrial sector including control cables, signal (instrumentation) cables, thermocouple compensating cables, LT (low tension) power cables, railway signalling cables, railway axle counter cables, fire resistant low smoke cables, fire survival cables etc. It also offers a wide range of optical fibre cables (single mode and multi mode) including armoured aerial, unarmoured, all dielectric self-supporting (ADSS) cable and has recently started manufacturing optical fibre direct to home (DTH) cables. PCL is the single largest supplier of cables to Indian Railways.

PCL currently has three cable manufacturing facilities, two in Rajasthan and one in Haryana. Its Haryana unit has a capacity of 3.85 million conductor km of polythene insulated jelly filled telephone cables per annum, which is among the largest manufacturing capacities at a single location in India. Its optical fibre cable plant at Khushkhera in Rajasthan has the capacity to produce more than 16000 cable km per annum of OFC in assorted sizes/types. Its third plant, which also produces power and railways cables is its main plant and has been the foundation for its success. Currently, it has the capacity to produce 25000 km of low tension and 1500 km of high-tension power cables. All its manufacturing facilities conform to the most demanding national and international specifications like: ITD, TEC, IRS, JSS, DGMS, BS, IEC, ASTM, DIN etc. In view of the massive investments in infrastructure, power, railways and the industrial sector, the company is undergoing aggressive expansion. It has recently completed the first phase of expansion by setting up additional capacity of 5,000 km of LT power/railway cables and 1,500 km HT power cables with at an investment of Rs.15 cr. It is further expanding its LT power cable facility to 55,000 kms and HT power cable capacity to 3,500 kms in the second phase to be completed by end of this year.

The cable industry in India is witnessing good growth in demand from infrastructure investments in the power sector, modernization and upgradation of the railway network, revived requirement of telecom cables and large investments in new projects/ capacity expansion by the industrial sector all of which augurs well for PCL. For FY06, its sales increased by 100% to Rs.196 cr. whereas net profit stood at Rs.22 cr. compare to Rs.1.30 cr. last year. To fund its expansion, PCL recently raised around US $15 million through a GDR issue priced at Rs.198 per share. Considering its healthy order book position, PCL may end FY07 with a top-line of Rs.325 cr. and net profit of Rs.35 cr. This works out to an EPS of Rs.32 on its current equity of Rs.10.87 cr. or diluted EPS of Rs.21 on its fully diluted equity of 16.87 cr. With a 52 week high above Rs.300, the scrip has the potential to easily rise by 50% in next 9-12 months. Buy on declines.