Buying This Power-Infrastructure Stock Can Give Sharp 35% Return, Generated High RoCE of 75%: ICICI Direct

Reputed brokerage firm ICICI Direct recommends investors to buy the stocks of Techno Electric & Engineering. The company's EPC Business contributed ~92% to FY22 revenue and generated an excellent RoCE of 50-75% over the past 5 years.

Stock To Buy: Target Price & Financial Result

The Current Market Price (CMP) of Techno Electric & Engineering is Rs. 283. ICICI Direct has estimated a Target Price for the stock at Rs. 385. This stock has the potential to give a 35% return, in the upcoming 1 year. It is a small-cap stock with a market capitalization of around Rs. 3,166 crore.

Stock Outlook
Current Market Price (CMP)	Rs. 283
Target Price	Rs. 385
Potential 1 year return	35.00%
52 week high share price	Rs. 319.75
52 week low share price	Rs. 222.00

Techno Electric & Engineering's consolidated revenues came in at Rs. 173 crore, down 8.7% YoY impacted by weak execution in EPC segment, EBITDA came in at Rs. 47.8 crore, down 13.4% YoY with margins at 27.6%, contracted by 151 bps YoY. Consequently, PAT de-grew 21.1% YoY to Rs. 36 crore, impacted by lower other income. Additionally, Techno Electric & Engineering owns ~130 MW of wind power generation capacity.

Advantages Of The Stock: ICICI Direct

Commenting on the stock, ICICI Direct stated, "Strong pick-up in execution, sale of wind energy assets and foray into data centre business to drive strong financial performance, going ahead. We continue to remain positive and retain our Buy rating on the stock. We value Techno Electric & Engineering at Rs. 385 i.e. 13x PE on FY24E. Entry into data centre, smart meters and FGD market and become significant EPC player over the next three to four years. Improved revenue visibility, healthy balance sheet and cash balance of Rs. 1200 crore. We expect revenue, EBITDA to grow at CAGR of ~25.8%, 29.9%, respectively, in FY22-24E."

Company portfolio: Techno Electric & Engineering

Techno Electric Engineering Company is one of the leading power-infrastructure companies engaged in three primary business segments; EPC (construction), renewable power generation (wind power) and public-private partnership (PPP) projects in transmission & distribution (T&D). They are at the top of Engineering, Procurement and Construction (EPC), asset ownership and operations and maintenance services in the three industry segments of generation, transmission and distribution. Incorporated in 1963 and headquartered in Kolkata, their operations are spread across India and abroad.

Disclaimer

The above stock was picked from the brokerage report of ICICI Direct. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.