Torrent Cables - Rs.131.00

Torrent Cables Ltd. (TCL) was incorporated as Mahendra Electricals Ltd. in 1960 but was taken over by the Torrent group in 1989 and renamed thereafter. Since then, TCL has emerged as the market leader in High Tension XLPE power cables and is one of the fastest growing cable companies in India. It manufactures XLPE insulated cables, PVC insulated cables, Rubber insulated cables and Specialty cables. It manufactures XLPE insulated cables in the voltage range of 1.1KV to 132 KV, Low-Tension power cables up to 1.1KV and High-Tension power cables up to 11KV. It also produces EHV, TRS flexible cables, welding cables, lift cables, colliery cables and specialty cables in the form of fire resistant low smoke cables (FRLS), railway-signalling cables, mining and trailing cables.
TCL has an integrated manufacturing facility at Nadiad in Gujarat, which is equipped with the most advanced Nitrogen Dry-Cured continuous catenary vulcanizing line in technical collaboration with M/s John Royle of USA. The products manufactured are BIS certified and comply with IEC standards. It has a very well equipped R&D centre and in house facility to cater to all routine type acceptance and special tests. It’s also the first company in the cable industry to get ISO 9001:2000 certification. Last fiscal, it invested in a wire drawing machine, wire armouring machine and material handling equipment to de-bottleneck capacities in certain areas and reduce the cycle time. Since the plant is operating at full capacity, the company is evaluating new expansion plans. TCL has a very exhaustive customer base spread over State Electricity Boards, Utilities, EPC Contractors, government/semi-government companies, private companies, dealer network, consultants and many more. Apart from the SEBs, its clientele includes biggies like Tata Power, L&T, BHEL, ABB, Siemens, Alstom, Jindal, Reliance, Essar, Suzlon, NTPC, Railways, Powergrid, SAIL, Torrent Power etc.
Government initiatives on power sector reforms have resulted in increased in demand for power related products including cables. Rural electrification programme has been to ensure electrification of all villages by 2009 apart from continuous efforts to upgrade and modernize the power distribution network. Hence the future outlook of TCL is quite promising. For FY06, its turnover grew by 15% to Rs.146 cr. whereas net profit increased by 20% to Rs.17.75 cr. registering an EPS of Rs.24 on its equity of Rs.7.48 cr. TCL is near a debt-free company and hasn’t diluted its equity in the last 10 years. Although it was a BIFR case earlier, it made a smart turnaround in 2004. However, due to rise in input costs of Aluminium, Copper and Insulating materials, its profit margin may remain under pressure. Hence for FY07, it is expected to report total revenue of Rs.160 cr. with PAT of Rs.16 cr. i.e. EPS of Rs.21. With its 52-week high/low as Rs.296/ Rs.94, the scrip has the potential to cross Rs.175 (35% appreciation) in 12 months.