Roto Pumps Ltd - 55.00 Rs

Roto Pumps Ltd (RPL) was established in 1968 for manufacture of progressive cavity pumps with indigenous technology, for the first time in India, as an import substitute. Since then it has emerged as a reputed manufacturer primarily for progressive cavity pumps and twin screw pumps. It offers a comprehensive range of pumps as per application, apart from horizontal internal bearing, horizontal external bearing, vertical bearing pumps etc. Company markets its products under brand name ‘RotoFLOW’ and ‘RotoPOSI’ which are very well accepted in the market. These pumps have very wide application and are used by across the industry including oil & gas, sugar, paper, steel, fertilizer, agriculture, good, chemicals, mining, ceramic, waste water treatment, pharma etc. Importantly, RPL also manufactures pump’s spare parts and other accessories like pressure switches, gauges, relief valves, strainers, dry running protection device etc. It also offers paid annual maintenance contracts including spare parts for its own pumps as well as pumps of other makes.

RPL has two manufacturing facilities – one unit at Noida and the second one at Noida Special Economic Zone (NSEZ). Being an integrated player, most of the critical components of the pump are manufactured in house leading to lower cost of production and best quality. Infact, company has a rich heritage in manufacturing technology with sophisticated machine tools and testing facilities. It has a good distribution network across the country with offices in Noida, Vadodara, Kolkata, Bangalore, Chennai, Pune, Mumbai etc. Besides India, it has warehouse cum marketing office in Australia and U.K. Due to higher realization, company is putting special thrust on export with its products being exported to USA, Canada, Brazil, Spain, Germany, Egypt, South Africa, Japan, Taiwan, UAE etc. RPL is strengthening its supply chain system and has increased stock levels at UK and Australia warehouses to enable them service the market more effectively and also penetrating in other existing markets. Meanwhile, company is developing other markets in China, Middle East, Far East Asia, Africa and have been able to establish contacts with potential partners. In future, RPL has plans to introduce Triple Screw pumps and Lobe pumps to enhance its product line.

On the back of strong industrial growth, it registered 40% jump in sales to 34 cr whereas PAT shot up 125% to 2 cr for FY07. So it reported an EPS of nearly 7 Rs on a small equity of 3.10 cr. It declared 15% dividend for FY07 against 10% last year and the scrip is still trading cum dividend giving a yield of approx 3% at CMP. For the June’07 quarter, sales grew by 35% to 7.90 cr but NP increased by 70% to 0.44 cr due to better operating margin. Accordingly for the current year it may clock a turnover of 45 cr and profit of 3 cr i.e. EPS of 10 Rs on current equity. With 52 week H/L as 71/30 Rs and promoter holding of 70%, this engineering company is trading reasonably cheap at a market cap of merely 17 cr. Investors are advised to buy at current levels as share price has the potential to appreciate 50% in 12~15 months.