VULCAN ENGINEERS LTD - A POTENTIAL MULTIBAGGER

 

Be it Electricity or Petroleum products ,cost of energy resources are increasing year after year and this trend is expected to continue in future.So ‘Energy saving ‘ is the buzz word in corporate India especially in power/fuel intensive industries.On this back ground , companies working for implementing Eco friendly  energy saving technologies catching special attention. VULCAN ENGINEERS LIMITED(VEL) is a small company specializing  in design, engineering, construction and erection of kilns, process lines and furnaces for the steel industry.In India ,the size of steel industry is very large hence the scope too.Vulcan Engineering is originally incorporated in 1963,but its performance was poor mainly due to working capital deficiencies and its inability to move with technological changes.In 2010 this company was taken over by Italy based Terruzzi Fercalx Group (TFG) and now this foreign promoters holding 58% stake.In October 2011,company allotted another 13,10,000 Equity Shares of Rs. 10.00 each at a premium of Rs. 36.50 per equity share on preferential basis to SocietaItaliana Per le Imprese All' Estero - SIMEST SpA ('SIMEST') Italy which constitute 14% of the total equity.SIMEST is an agency formed by Italian goverment to promote italian business in foreign countries.The present promoter Terruzzi Group is in existence from 1897 and having many niche patented designs for  industries like Glass,Aircrafts,Steel,Pharmaceutical,Cement ,Food,Rubber ..etc and is well known for its energy efficient eco friendly designs and execution capabilities.TFG is also concentrating in Gasification technology which is for generating power out of waste.Under the old management , due to lack of sufficient working capital Vulcan Engineering executed the limited available orders through job work basis.But now under the new management company is working to set up its own fabrication facilities which is expected to ready by next 3-6 months.VEL is currently working on few projects for  Visakhapatnam Steel Plant and Neelachal Ispat.It is a fact that company  not reported any major order win in recent past . But the successful execution of the existing orders may turn as a testimony for the efficiency of new management and work as ‘reference projects’ for further order wins.Share price of VEL moved sharply after last quarter turnaround performance and now  trading around Rs.45/- which is close to last preferential offer price.If company can repeat at least the last quarter performance in March qtr ,it may move bit more and further order wins if any  may lift it to higher levels.Considering the potential of the industry ,foreign parents niche offerings and  vast experience, VULCAN ENGINEERS may turn as a multibagger in long term.CMP is Rs.44/-


Disc : I have vested interest in VEL