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Emco Ltd – Steady Current

June 6, 2008

Emco posted a net sales growth of 36% YoY to Rs 3.4bn for Q4FY08 and 44% to Rs 9.4bn for the full fiscal. Project division revenues have picked up pace during H2FY08, contributing 30% of net sales for the fiscal. Management expects an even higher revenue share from this division in FY09, at 45%. EBITDA margins were up by 155bps during Q4FY08 to 14.2% and by 50bps for FY08 to 13.7%. Net profit saw a growth of 98% YoY for the quarter and 59% for the year.

Emco’s order book stands at Rs 11bn, which is 1.2x FY08 sales. The healthy order backlog and bright outlook for the project division indicate good revenue flows over the next two years.

Emco is trading at 10x one-year forward P/E, which is a 61% discount to peer company, ABB.

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