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ICSA India – Initiating Coverage – 5Paisa

November 21, 2007

5Paisa/Indiainfoline has initiated coverage on ICSA India Ltd with a BUY Rating. ICSA, offers products and solutions for power, oil and gas and the water segment, has developed products and solutions to arrest losses during transmission. Apart from conventional products, it developed Intelligent Cathodic Protection solutions (iCAP), Intelligent Automatic Meter Reading (IAMR), Intelligent Automatic Water Reading solution (IAWR) and street light monitoring control systems.

With the introduction of newer and better products, expect the company’s operating margin to expand. This will be supported by patents for three of its products, which could lead to improved realizations. We expect operating margins to sustain at 26%, an improvement of 140 bps by FY09E over FY07.

ICSA’s revenues and profits have registered high growth of 293.2% and 297.6% CAGR over FY05-07. ICSA is a proxy on the growth opportunities in the power sector. Expect ICSA’s revenues and profits to witness 75.6% and 81.5% CAGR over FY07-09 respectively. At the current price, the stock trades at 12.5x and 8.3x its FY08E and FY09E EPS of Rs25 and Rs37.6 respectively. Indiainfoline recommends BUY with a one-year price target of Rs451, an upside of 44.7%.

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