SUNIL HITECH ENGINEERS LTD.- BUY

    

The long wait is over and the outcome is clear. Fortunately it is a clear mandate which may help the government to take bold decisions to revive the economy and that is the need of the hour.Lower number in Rajya Sabha for the ruling party may be an issue in certain cases for the initial years ,but  over all situation will be far better than the recent past . Another threat for economy in near future may in the form of monsoon which is beyond everyone’s control.Let us hope for the best in this case too. As we are aware ,the recent run up was very  sharp on expectation of a strong government . So it is the time to react to the reality. Some profit booking can’t be ruled out once the initial celebration ends.I hope my readers will show enough prudence while selecting stocks in a volatile market condition and give priority to quality and value in stock selection.

‘Power’ is important not only in politics but for the growth of any economy.In recent past ,due to lack of clear majority in parliament govt could not take any bold steps to increase power production .Lot of small and large projects stuck at different stages  due to policy paralysis especially related with land acquisition ,environmental clearance ...etc. I hope ,the new government will give priority to this sector which is the backbone of any industry in any country.So this week selecting a stock which will be a beneficiary for additional capex and expansion in power sector. Sunil Hitech Engineers ( SHEL) is a Maharashtra based company .Hard work,acumen and grace of god is the perfect combination for success in business and growth of this company is a  testimony for that. Started by Mr Ratnakar Gutte ,a high school dropout with just Rs 2,000 as capital ,Sunil Hitech now turned as a Rs.1500 Cr turnover company . Now company is professionally manged with the help of his two sons -one a mechanical engineer and the other an MBA.


SHEL specializing in fabrication, erection and commissioning of  power plants.In addition to power plants ,company executing Lump sum turnkey (LSTK) contracts of Transmission & distribution projects, Steel Plants, Sugar Industries, Process & Piping Industries, irrigation projects  ..etc .Company is one of the few qualified contractors for BOP works  up to 660 MW .Comany’s marquee clients includes NTPC,BHEL,Alstom Energy Corporation,L &T,JSW Steel,JSW Energy ,BALCO ..etc and various state electricity boards.At the end of FY 2013 SHEL’s order book position was Rs.2300 Cr .

In FY 2012-13 ,on a consolidated basis ,company reported a top line of rs.1253 Cr , a net profit of Rs.55 Cr and an EPS of Rs.29 . During the latest March quarter promoters hiked their stake from 53 % to 58 % by subscribing shares on preferential basis .In addition to this ,they also subscribed warrants which will be converted into equity shares within 18 months.On full conversion of these warrants promoters stake will again rise to 66 % .Pumping of this additional funds by promoters will help the company to reduce its dependency on debt and some comfort on working capital side. Ashish Dhawan – a well known investor and co-founder of P/E firm ChrysCapital holding close to 2 % stake in SHEL in his personal capacity .

                                                                                      I believe, the emerging scenario will be very  positive for a company like Sunil Hitech Engineers .Stock is valued cheaply at CMP Rs.76 with a P/E multiple of less than 3 and its current market cap is just  1/15th of its last year consolidated top line  . Recommending as a BUY @ CMP of Rs.76 for long term investors.Stock listed both in NSE and BSE

Link to Company Website HERE

Link to Latest Annual Report HERE 

Disc : It is safe to assume that I have vested interest in SHEL