Shilchar Technologies Ltd - 125.00 Rs

From a modest beginning of manufacturing only R core transformers in 1989, Shilchar Technologies Ltd (STL) erstwhile Shilchar Electronics Ltd today boast of manufacturing various types of transformers and cores catering to a wide cross section of the industry segments ranging from highly competitive consumer goods to the tech savy industrial segment, both at home and abroad. Backed by a state of the art manufacturing facility in Vadodara, Gujarat and competitive pricing strategy, today STL holds a dominant position and is recognized as a world class manufacturer of transformers and cores. It has UL and CSA approvals for its products and caters directly to the market requirement as well through its franchisees in different parts of the country. Ironically it serves to a wide range of industry segments which can be seen from below mentioned product profile.

· Power Transformers: STL can manufacture and test transformers upto 66KV Class and 15MVA capacity. It makes three Phase oil cooled transformers with & without OLTC and with & without RCC Panel. Presently it has an installed capacity of 1000 MVA for power transformers alone.

· Distribution Transformers: Under this division, STL can manufacture & test transformers upto 33KV Class and 10MVA capacity with an installed manufacturing capacity of 200 MVA per annum at present. It specializes in producing single phase oiled cooled up to 100 KVA, three phase oil cooled transformer up to 2 MVA, 33KV class & three phase dry type rransformers upto 1 MVA, 11KV class.

· Linear Transformers: STL manufactures new age power rangers for all electrical needs. Be it for computers / peripherals, telefax / copiers, audio / video equipment, medical or communication equipment, STL has an extensive range from R core transformers to El Transformers and Toroidal to Current transformers used in electronic energy meters. These transformers are supplied according to customer's requirement of different class of thermal insulation, cut-offs, static-magnetic shielding, special mounting, epoxy moulding, vaccum impregnation etc.

· Telecom Transformers: With engineering support from Custom Magnetics-USA, STL manufactures telecom and data transformers with highest quality standard for all sorts of telecom equipment. Its ferrite transformers are exported regularly and used by leading telecom giants of the world.

· Core & Laminations: STL manufactures various types of cores including R-Cores, R-Toroid cores, rectangular cores, cut C cores, split cores etc on SPM Japanese winding machine and using M2H/M4 grade CRGO material. On the other hand it produces EI lamination using M6 grade CRGO material of 0.35 mm.

· Bobbins: STL has set up ts own Plastic Bobbins manufacturing unit to support the need of the industry for high-grade quality bobbins. This division also makes plastic parts for transformer industry using all engineering plastics viz. Nylon 6, PBT, Ploycarbonate, ABS, Glass filled Nylon 6, Nylon 66 etc depending on the requirement.

Indian transformer market size is estimated at Rs.10,000 cr approximately and is likely to grow at a rate of 8 to 10% annually for coming 10 years. The growth is mainly due to large power generation projects coming into the various parts of the country. The electrification of rural areas all over the country will require many transformers and the present capacity in the country is not to enough to meet the growing demand trend. Hence to cash on this opportunity, STL is in the midst of expansion and modernization of its plant and has also enhanced the existing production capacity up to 20 MVA Transformers from 15MVA earlier. Last year, company bought new land, installed modern plant and machinery and completed the construction of new building for manufacturing of power and distribution transformers upto 500 KVA. It also merged its wholly owned subsidiary called Shilchar Payton technology Ltd with itself. For FY08, it is expected to clock as turnover of Rs 75 cr and PAT of Rs 4.25 cr i.e. EPS of Rs 11 on equity of Rs 3.80 cr. However, considerable rise in stell and copper wire prices is a cause of concern. Still for FY09 company has the potential to register a topline of more than Rs 100 cr and profit of around Rs 6 cr i.e. EPS of Rs 16. That means the company is current available at a PE ratio of less than 8x times against FY09 earnings. Investors are advised to accumulate this scrip at sharp decline for a price target of Rs 190 (i.e. 50% appreciation) within a year.

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