Jyoti Structures Ltd - Rs 55.00
Incorporated in 1974, Jyoti Structure Ltd (JSL) is among very few companies worldwide, which possess the capabilities to execute total turnkey jobs that involve setting up both high voltage power transmission lines and substations. In each of these lines, it undertakes projects on a global scale, offering a complete range of services from design, engineering consulting, tower testing, manufacturing, construction and project management. JSL has an expertise to take on turnkey projects for transmission lines from 33 kV to 800 kV and substations upto 400 kV irrespective of terrain, location and requirements of power utilities within and outside India. About 60% of its orders come from transmission projects, 20% from substation and the rest 20% from rural electrification related distribution projects. However JSL is largely dependent on order from As far as dependence on customer is concerned, it derives nearly 40% of total revenue from Power Grid, followed by 35% from various State electricity boards, and rest from private players. With a rich experience of more than three decades company boast of executing projects across 36 countries worldwide.
In order to provide end-to-end solutions, JSL has built two manufacturing units in India i.e. Nashik and Raipur. With state of the art CNC machines, these manufacturing units are capable of making proto types, fabricating and galvanizing transmission towers and structures, microwave towers, wind mill tower, railway electrification structures, etc up to 76,000 MTPA. Besides, its wholly owned subsidiary JSL Structures is having a capacity to manufacture another 19800 tons of transmission line towers. It also has in-house tower testing station up to 1000 kV at Igatpuri. Notably till now, JSL has supplied almost 700,000 MT of towers and has constructed approx 20,000 ckt kms of transmission lines for various utilities in domestic and exports markets. On the back of huge flow of investments in the power transmission and distribution segment, JSL current order book stands at an all time high value of more than Rs 3500 cr. Out of these, almost 80% of the orders are from domestic and the rest are from abroad, mainly Dubai, Libya, Oman, Qatar and Namibia.
For future growth, JSL is equally betting on international market and has formed a 20:80 joint venture company - Gulf Jyoti International (LLC) - with the Gulf Investment Corporation, Kuwait to establish a power transmission tower manufacturing facility in the United Arab Emirates (UAE). The new facility will have the latest technology and equipment that will enable the plant to achieve a production capacity of 33,000 tonne per annum on a two-shift basis. To tap the business in South Africa, the company has formed a JV named Jyoti Structures Africa in Johannesburg to participate in transmission line business opportunities in Southern Africa, in which it has 70% holding. This subsidiary has already received an EPC contract for 765 KV transmission line of Rs 93 crore to be executed in one and half year’s time. As per latest report, both these joint ventures have order in hand of Rs 160 cr and Rs 240 cr respectively.
Under 'Rajiv Gandhi Grameen Vidhyutikaran Yojana' government is looking to electrify all un-electrified villages and to provide access to electricity to all households in next five years. It is also striving to increase the per capita consumption to 1000 units and provide quality and reliable power to all by 2012. Importantly, development of the transmission network has to been done in tandem with growth in generation capacity to avoid mismatch between generation capacity and transmission facilities. Based on estimated generation capacity addition including Ultra Mega Power Projects in XI Plan, there is huge opportunity for the transmission line companies like JSL. Financially, JSL has recorded 40% and 30% growth in revenue and profit to Rs 1370 cr and Rs 72 cr respectively for FY08. Even for Q1FY09 it has maintained the growth momentum. Accordingly for FY09 it is estimated to register a topline of Rs 1650 cr and PAT of Rs 80 cr leading to an EPS of Rs 10 on current equity of Rs 16.20 cr with face value as Rs 2/- per share. However, as still a whopping 21% stake is held by FII’s as on 30th Sept’08 and that too by Citigroup, Morgan Stanley, Bears & Sterns, DSP Merill, JP Morgan etc, scrip may see some more distress selling in near future. Hence investors are advised to keep accumulating this scrip at sharp declines for a price target of Rs 120 (i.e. 100% appreciation) in 12~15 months.
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