Stock Tips

Jyoti Ltd :

BSE ID : 504076

Recommended Price Rs. 80

Target Price: Rs. 150-300

As against an order book of Rs.1000 crores, the market cap of the company is just Rs.100 crores. The company caters to Water, Power and Irrigation sectors where immense opportunities exist.

Jyoti Ltd

Jyoti Ltd. is a leading manufacturer of pumps in the country and caters primarily to the Water, Irrigation and Power sectors. The company manufactures Large Pumps, Motors and Generators.

The Company has a presence in the Small Hydel Sectors, Water Handling Sector, Lift Irrigation Sectors and also in the Wind Energy sectors.

The company has lately diversified in the field of Wind Power and has taken number of steps for the development of Wind Turbine with latest technology and its commercialization through development of Wind Farms. The company manufactures indigenously designed and developed Permanent Magnet Synchronous Motor for manufacture of Turbines.

Financials:

The latest Financials of the company are given as under :-

QUARTERLY – LATEST RESULTS – Jyoti Ltd (Curr: Rs in Cr.)
Particulars Quarter Ended Quarter Ended Quarter Ended Year Ended Year Ended Year Ended
(Mar 09) (Mar 08) (% Var) (Mar 09) (12) (Mar 08) (12) (%Var)
Sales 91.09 87.35 4.3 253.33 207.62 22
Other Income 0.24 0.08 200 0.56 0.41 36.6
PBIDT 5.48 9.26 -40.8 22.01 25.1 -12.3
Interest 3.72 2.77 34.3 13.73 12.36 11.1
PBDT 1.76 6.49 -72.9 8.28 12.74 -35
Depreciation 0.61 0.55 10.9 1.96 1.76 11.4
PBT 1.15 5.94 -80.6 6.32 10.98 -42.4
Tax 1.84 1.02 80.4 1.99 1.12 77.7
Deferred Tax -0.31 -0.61 49.2 -0.31 -0.61 49.2
PAT -0.38 5.53 PL 4.64 10.47 -55.7

Latest Data As On 14/07/2009
Latest Equity(Subscribed) 12.98
Latest Reserve 41.21
Latest Bookvalue -Unit Curr. 41.75
Latest EPS -Unit Curr. 3.66
Latest Market Price -Unit Curr. 34
Latest P/E Ratio 9.29
52 Week High -Unit Curr. 65
52 Week High-Date 7/16/2008
52 Week Low -Unit Curr. 25
52 Week Low-Date 3/9/2009
Market Capitalisation 44.1
Stock Exchange BSE
Dividend Yield -% 0

(Source : Capitaline)

Conclusion & Investment Rationale:

Jyoti Ltd. has been in existence for over 60 years and manufactures Large Pumps, Motors and Generators for core Infrastructure sectors like Water, Irrigation and Power. Besides, the company is sitting on huge real estate assets. The company has 15 acres of land close to Vadodara Railway station, which has potential to be exploited commercially. This can be achieved by relocating the company’s production base elsewhere. The company had shortlisted Mogar, near Anand as a possible alternative.

The stock of Jyoti Ltd. suffers from a few negatives. The company has high debt – the company paid an interest of roughly Rs 14 crores for FY 09. An interest cost of Rs 14 crores on EBIDTA of Rs 22 crores leaves the company with poor Interest Cover. The high interest cost has been a big drag on the profitability of the company. Low promoters holding of around 22% is another cause of concern. Moreover, the company suffers from Information dissemination issues like voluntarily disclosing status of execution of various orders and new orders received or holding periodic Investor or Analyst conferences.

On the positive side, the company has a very healthy order book of Rs 1000 crores. The company has last year bagged orders worth Rs 541 crores (Jyoti’s share of the orders in JV) for supply of pumps for Irrigation and Drinking Water projects from the Karnataka Neeravari Nigam Ltd (KNNL), set up by the Karnataka Government. Jyoti Ltd. is responsible for complete electro-mechanical work with associated control and instrumentation system, including transmission line of 110 KV and 220 KV along with sub-stations. The pumps would make available water for irrigation to 1.07 lakh hectares of farm land in Karnataka. Besides, nearly 20 lakh people in about 315 villages and some urban areas in drought-prone belt would be supplied drinking water from 700 water tanks to be set up in the southern State. This is the single, largest electro-mechanical package awarded to any pump manufacturer in India and is to be executed over 3 year period. The company had also received turnkey order worth Rs 27.24 crores from Aravali Power Co. Pvt. Ltd. (A Joint Venture of NTPC, HPGCL and IPGCL) for design, engineering, supply, erection, testing and commissioning of cooling water system and make up water system for Indira Gandhi Super Thermal Power Plant — Jhajjar

The company has successfully executed a Rs 250 crores project received from the JV of Hindustan Construction Co. Ltd and Nagarjuna Construction for Godavari Lift Irrigation Scheme in Andhra Pradesh. The company is looking for more orders for other upcoming irrigation schemes of Gujarat, Chattisgarh, Karnataka and Andhra Pradesh.

We believe that successful execution of the Rs 250 crore Godavari Lift Irrigation Project and also of the Rs 541 crores project from Karnataka Government will qualify the company for various other large Water and Irrigation projects in the future. Government’s impetus on Irrigation and Water with large outlays and also the large capacities coming up in Power sector augur well for the company and provide significant revenue visibility to the company.

We believe that the negatives look fully discounted in the current market price of the stock and the possibility of the stock drifting down too much, at least in the short to medium term, from the current levels looks low. Investors can choose to accumulate the stock at the current price and on declines.

Capital Market / 07:34 , Jun 12, 2010
Jyoti targets Rs 400-cr sales this fiscal
The Vadodara-based Jyoti Ltd, which makes hydel power equipment, engineered pumps, rotating electric machines and switch gears, has set itself a sales target of Rs 400 crore this fiscal, up from Rs 292 crore in 2009-10.

The 65-year-old company has an order book of Rs 1,023 crore. The hydel division has a 25 per cent market share in small hydel projects (up to 10 MW) and has installed 450 hydel sets with a cumulative capacity of 300 MW.Mr Rahul Amin, Chairman and Managing Director, said there was immense potential in small hydro projects with the Centre having identified an opportunity to generate 30,000 MW through this route. He also said, the hydel division plans to book orders worth Rs 150 crore this fiscal.

Ashish Chugh is an equity analyst and investment consultant based at New Delhi, INDIA. At the time of writing this article, he, his firm and dependent family members have a position in the stocks mentioned above. The author, his firm or any of his dependent family members may make purchases or sale of the securities mentioned in the report while the report is in circulation.

Buy Pyramid Saimira

High Risk Pick. But gains could be high too.

Risks:

There is possibility that this stock could be stopped from trading.
The promoters are banned from accessing the capital markets for 7 years.
No active running business.
All company accounts under IT attachment.
So many creditors with Winding up petition.

Gains:

There is a possibility that the company could come out this crisis .
Creditors could workout a package.
Promoters may infuse money into company if creditors approve the plan.
Company could restart theatre business.

Buy at the current price between Rs.9 to Rs.10

Target: 30.Rs

I hold a decent amount of shares in this company.

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