Sujana Towers Ltd - 72.00 Rs

Incorporated in 2006, Sujana Towers Ltd (STL) was actually formed on demerger of the tower division from Sujana Metal Products Limited pursuant to the scheme of arrangement and amalgamation. It belongs to the well known Sujana group which has diversified interest in steel, domestic appliances, engineering, transmission towers etc. Hence STL is basically into designing and manufacturing of telecommunication and hi-tension transmission towers. Its main products include power transmission line towers (from 11 KV to 400 KV) and telecom towers (selfsupporting lattice towers upto 100 metres height, triangular/square cross-section, hybrid towers, angular/tubular towers, lattice Guyed masts and monopoles). It is the only integrated tower manufacturer in south India having an in-house re-rolling facility for structural steel & fabrication of tower and tower parts. Thus it has the capability to deliver ready-to-erect structures in customer-specified sizes in the shortest time spans. Notably STL is India’s largest galvanized steel tower manufacturer as it has a galvanizing plant which makes only galvanized tower to impart strength, longevity and resistance against atmospheric impact and peeling. Lately, to cash on its engineering skills and sound technical knowledge, STL has forayed into providing services like Engineering & Consultation, Turnkey Installation and Inspection & Maintainance. Thru joint venture with EPC companies like Deepak Cables, Annapurna Const, company is already executing turnkey EPC projects in power segment and aims to emerge as turnkey contractor in next couple of years.

Presently, STL has the manufacturing plant at Hyderabad, Andhra Pradesh with a galvanized tower manufacturing capacity of 128,125 MTPA while its heavy structural steel product capacity stands at 70,000 tonne per annum. Notably, the unit boasts of manufacturing transmission towers on turnkey basis (i.e. surveying, civil foundations, supply and erection of towers, stringing of conductors, commissioning and charging of lines) to electricity boards of Andhra Pradesh, Karnataka and Tamil Nadu and Power grid. Besides it has a huge clientele in private sector including Reliance energy, BHEL, Subhash Project and all the telecom companies like Rcom, Bharati, Idea, BSNL, GTL, Essar, Tata tele, Erricson etc. India currently has about 200,000 telecom towers and is estimated to need about 350,000 more towers in next five year. On the other hand power sector is undergoing a massive expansion coupled with rural electrification to achieve power for all by 2012. Hence to cater to the rapidly increasing demand, company is in the midst of setting up a Greenfield plant in Chennai with an installed galvanized tower manufacturing capacity of 100,000 MTPA. This plant will also have the facilities to manufacture high mast light poles, railway electrification structures etc and will also cater to export requirements. The project has been fully funded and is expected to start operation by end of this calendar year thereby taking company’s total capacity to 228,000 MTPA.

For future STL is looking put up a new plant in Gujarat to produce galvanized steel parts with a capacity of 75,000 MTPA. Company is also contemplating to acquire a company in China for manufacturing of tower parts and set up a subsidiary in Hong Kong for sourcing cheaper raw material. Recently STL has acquired 51% shareholding in Telesuprecon Ltd a Mauritius based company, undertaking telecom infrastructure contracts in various cast / central African countries. Earlier in Oct 2007, company made a pref allotment of 80 lac warrants to be converted @ 135 per share to fund its Chennai expansion plan. Presently, company has a healthy order book position and is expected to report sales of Rs 575 cr and PAT of Rs 45 cr for the financial year ending June 2008. This works out to an EPS of Rs 11 on current equity of Rs 20.80 cr with a face value of Rs 5/- per share. However, company has recently taken the extension to end the financial year in Sept 2008 with 15 months performance. As nine months of FY09 will include the sales from Chennai unit it may report sales of more than Rs 800 cr and PAT of roughly around Rs 60 cr. To fund its future plan company is looking to aggressively raise nearly 300 cr thru equity route which may dilute the equity by more than 50%. Investors are recommended to buy at current levels as scrip can easily appreciate 50% within 15 months.

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