Skipper Limited:
Market Cap: 1519.40 Crores
Current Price: 149.5
Book Value: 29.70
Stock P/E: 16.41
Dividend Yield: 0.88%
Face Value 1.00
Return on capital employed: 30.11%
Debt to equity: 1.13
Interest Coverage: 15.09
Skipper is the market leader in power and water sectors, is among the fastest growing companies in the power Transmission & Distribution area, which offers huge potential that the management is confident of exploiting. Its all-encompassing presence in the value chain from angles to tower production and fasteners to EPC enhances cost efficiency, which coupled with market leadership will lead to better returns. The company plans to scale up each of its businesses with an asset-light model, and focus on increasing tower exports. It also plans to gain a strong foothold in monopoles, EPC and PVC pipes.
Skipper has strong presence in North East India in Power T&D and have 5 plants across India ( 2 in Howrah, 1 in Assam, 1 in Telangana, 1 in Bulandhshr).
Recently company has ventured in Water Distribution (PVC) as well. Currently, 80% sales is from Power T&D and PVC has 7% share in share. Company is expecting to increase PVC share in sales to 20% on expanding the PVC pipes business.
MY VIEWS:
a) Given thrust of government to increase power and electricity across India, Power distributors like Skipper will be benefitted and Hence, increase in sales.
b) Third largest capacity of TLT towers: Skipper by April’2015 will have total capacity of 1, 75,000 TPA (up from 1, 51,000 TPA) of tower manufacturing capacity. It is the third largest capacity post KEC & Kalpataru in the domestic space. It has three manufacturing plants in the state of West Bengal and assam. Given the huge capex plans in TLT infrastructure in the country, the demand for towers are expected to grow at rapid pace and Skipper is well placed to capture the opportunity. All the three manufacturing plants are approved by PGCIL. Also it will have added cost advantage due to same.
c) The Government’s thrust on water, irrigation, river management, improving sanitation, sewerage and urbanization the PVC pipes and fittings markets is expected to grow at much higher pace then its historical 8-10% CAGR rate and reach ~391 bn in FY19. Skipper’s PVC business will also increase with recent investment in Ahmedabad for same.
PS. I am tracking the stock and do not hold any share.
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