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Elecon Engineering

Elecon Engineering

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Published by: A_Kinshuk on Jul 22, 2010
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01/04/2011

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Q4 and FY10 Result Update
RESEARCH
Q4 and FY10 Result and Concall Highlights:Order Book Status
!
Net sales for the quarter stood at Rs. 329.09 crs compared to Rs. 288.53 crs lastyear. For full year FY10, the net sales stood at Rs. 1046.37 crs, i.e 9.56% higherthan Rs. 955.06 crs last year.
!
EBIT for the quarter stood Rs. 37.52 crs, down from Rs. 43.02 crs last year. Theincrease in depreciation (Rs. 2.55 crs - Due to capacity addition), a rise in otherexpenses to the tune of Rs. 3.32 crs., and huge draw down of the inventory leadto decrease in EBIT margin from 14.64% last year to 11.28% this year. For thefull year EBIT was down from Rs. 135.74 crs to Rs. 124.37 crs, where marginsshrank from 14.08% last year to 11.8% in FY10.
!
The management opines that last year saw drying up of orders for the sectorwhich lead to a lot of under-cutting in the margins leading to disturbed orderflow and depressed margins.
!
Interest expense for the quarter was down from Rs. 15.8 crs last year to Rs.11.73 crs. For the full year interest expense was up from Rs. 48.36 crs to Rs.50.88 crs.
!
Due to rise in other income in the fourth quarter as well as the full year, theQ4FY10 PBT stood increased to Rs. 34.11 crs from Rs. 27.22 crs last year. Asimilar impact was seen in full year results where PBT increased marginally byRs. 2 crs and stood at Rs. 90.31 crs.
!
Net profit for the quarter stood at Rs. 27.07 crs, 60% greater than Q4FY09. Forthe full year the growth was much less at 15%, where the PAT currently stood atRs. 66.17 crs.
!
The board has recommended a dividend of Rs. 1.5 (i.e 75% for face value of Rs.2) per share.The outstanding order book for the company stood at Rs. 1313 crs till April 30th,2010. The Company has received orders worth Rs. 398 crs till 18th May, 2010 fromthe year end. Which is greater than the total order inflow for full year FY10.
EUREKA RESEARCH
www.eurekasecurities.com
 
BU
20th May, 2010
ELECON
COMPANY DETAILSSHARE HOLDING PATTERN (%)
BSE CodeNSE SymbolBloombergMarket Cap. (Rs. Crs)Free Float52 Week High52 Week LowDividend Yield -%BetaPromoter GroupFIIDIIOthers
Total
Share price graph (Rs)505700ELECONELCN IN72755%110.8560.051.91.2845.711.0413.839.45
100ANALYST
Mohammad RiazuddinAnkit Shah
riazuddin@eurekasecurities.com
09903062346 / 91-33-3918 0386 - 87
RecommendationTARGETCMP: Rs. 108.00: Rs. 78.35Q4FY10 Result Update
Source: Company, Eureka Research
 
Taking this incremental order flow, the order book outstanding would sum upto Rs. 1570 crs. This happens to be 1.47 times its FY10 salesand 1.62 times its FY09 sales
Material Handling
Elecon is one of the renowned players in the Material Handling Equipment (MHE) industry with solutions for design, engineering,manufacture, supply, erection and commissioning of the project.It provides material handling solutions to sectors like1)Mining2)Cement3)Port Mechanisation4)Fertiliser5)Coal based power generation units
BUSINESS DETAILS
EUREKA RESEARCH2
ELECON
20th May, 2010
www.eurekasecurities.com
Client
Jindal Steel & Power LtdLarson & Turbo LimitedSical Logistics LtdGMR INFRA LTDZubery EngineeringAdhunik power & natural resourcesSAILBGR EnergyBGR Energy
TOTALDate
04/07/201004/07/201004/08/201005/12/201005/12/201005/12/201005/12/201005/12/201005/18/2010
Division
MHE(Product)GEARMHE(Product)MHE(Product)MHE(Product)MHE(Product)MHE(Product)MHE(Product)MHE(EPC)
Value (Rs. Crs)
47.840.5549.994.839.2730.398.9935.0551.92
398.67Order Bagged after March 2010
Source: BSE, Eureka Research
INDUSTRYMiningCementPort MechanizationEQUIPMENT
Idlers
Pulley
Shiftable Conveyors
Conveyors
Stacker-reclaimer
Ship loaders
Scrapers Impactor
Twin Boom Stacker
Circular Stock Pile
Ship loaders
Rail Pusher Car Wagon
Tipplers
Wagon Marshalling Equipment
DESCRIPTION
(rollers on which conveyor belt rests)(used for moving conveyor belt)
Broadly used in the movement of raw materials
(stacking the material invoiced through railway wagonsand reclaiming it for main production activity)(stacking and storing materials)(type of scraper)(type of scraper)
Used for storing (stacking) and reclaiming purpose
(transportation and placement of wagons)(designed for unloading broad-guage open rail wagons)(charging and spotting of wagon)
Used for loading, unloading and movement of goods
Product Portfolio
 
EUREKA RESEARCH3
ELECON
20th May, 2010
www.eurekasecurities.com
Contribution to Revenue:
Contribution of MHE division to the revenue of the company has increased from 28.09 % in the year 2005 to 59.30%. In FY10 the divisionhas generated 54.77% of companies earnings (EBIT) which is an increase of 50% compared to 4% of total EBIT in 2005.Company has been able to maintain high margin in MHE division due to its technical expertise and economies of scale, even during FY09 itwas able to hold its margin at 12.77%. The company takes two kinds of orders in the segment. First where it takes the orders forequipment only. Here the EBIT margins are around 14-15% and the execution period is around 10-12 months. These kinds of orders givegreater margins as well as shorter execution time. Besides this, the company also accepts EPC orders where it sub-contracts otherconstruction activities. Here the execution period increases significantly with a decrease in margins. However, with more sub-contracting, asset turnover and ROE improves. Currently the strategy was to capitalize on small projects (mainly product orders) withhigh margins rather than going for huge EPC projects with low or no margins.The company derives 73.7% of this segment's revenue from the power sector. The massive power generation capacity additions plannedcan bolster demand for the Company's product. Besides power, port mechanization and mining activities will also keep the order flow of the company ticking. Elecon Eng. will also be introducing new products like Pipe conveyors, High Speed conveyors and Curbed conveyors.Hence, we do not see a possibility where the order flow dries down to an extent where revenues and profitability of the company getshampered in several quarters to follow.
SteelPower
Wagon Tipplers
Stacker-reclaimer
Barrel Type Reclaimer
Scrapper Reclaimer
Wagon loader
Wagon tipplers
Side arm chargers
Apron Feeder
Paddle Feeder
Single & Double Roll Crusher
Cable Reeling Drum
Stacker Reclaimer
Idlers
Roller Screen(Barrel Type Blender Reclaimer for handling coal,iron ore, lime stone in a homogenisation stock yard)
Used for storing and handling raw material
(used for loading to railway wagons)(for hauling rake of wagons, placement of wagons on tipplertable and evacuation of empty wagons from tippler table.(designed to receive and control the flow of material frombins(temporary usualy mobile storage container) andhoppers(storage place within the plant).)(it is for reclaiming bulk material from bunkers and stockpiles)(it is for crushing of coal, coke, cinter, moderately hard rock,ore, chalk, etc)(used for power supply)(Roller Screen is suitable for separating coarse,wet, sticky and clay raw material.)
Used for storing and handling raw materials
 
YEAR 
201020092008200720062005
MHE Sales
620.45560.67437.34409.66225.9678.78
TOTAL
1046.37955.06826.44720.65457.82280.46
% of MHE
59.3058.7152.9256.8549.3628.09
MHE EBIT
83.0871.5762.7455.0420.711.62
Total(EBIT)
151.7144.31142.01119.5167.1639.48
% of MHE
54.7749.5944.1846.0530.844.10

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