Diamond Power Infrastructure, a Gujrat based transmission and distribution services provider and equipment manufacturing company provides turnkey services in T&D, manufacture’s Power Cables upto 550KV, Power & Distribution Transformers upto 220KV, Transmission and Distribution Conductors upto 765KV and Transmission Towers.
Being a major consumer of cables and conductors, Power sector is the prime demand driver. While conductors are largely used in transmission lines, the demand for power cables arises at each stage in the chain of power sector. We see sustained growth in demand for conductors and cables as investment in transmission and distribution sector is envisaged to increase by 71% and 29% respectively in the XIIth plan over the XIth plan. This would add to the revenue generation of the company.
The company, for the quarter ended 30 September’10, reported a net profit of Rs27.76 crore, a rise of 66% as compared to the corresponding previous quarter. The net sales during the period increased by 102.8%.
It recently entered into an agreement with Skoda (India) Pvt. Ltd. and Schaltech Automation Pvt. Ltd. for Executing Projects in T & D Segment up to 400 KV. It also started the trial production at its transmission tower facility at Vadodara that has come up with an investment of Rs.40 crore and has a capacity of 48,000 tonnes per annum. Going ahead, the company has a strong order book of Rs.1,450.6 crore, out of which Rs.713 crore is from EPC (Engineering Procurement Construction), around Rs.393 from conductors, Rs.252crore from cables and around Rs.91.3crore from transformers. Moreover, it recently received an order from Gujarat Urja Vikas Nigam Ltd. The The project needs to be executed in 7 months.
The share of the company looks quite attractive. Currently trading at 11.3 x and 8.8x FY11 and FY12 earnings respectively the stock can be added to one’s portfolio with a target of Rs.306 in the near term.
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