Consolidation of businesses should lead to enhanced synergies, as Bilpower becomes an integral player across the value chain. Bilpower incurred a CAPEX of Rs 390 mn in FY08. This has led to increase in capacity of electrical laminations to 16,500 tpa and added new stamping line with capacity of 15,000 MT. For FY09, the company has lined up Rs 50 crore CAPEX in adding Transformer manufacturing capacity.
Bilpower is a leading player in electrical lamination. Thus foray into motor stamping and transformer manufacturing business is a logical extension for a comprehensive portfolio. At the CMP of Rs 208, the stock trades at a P/E of 7.2x and 5.0x on FY09E and F10E respectively. Investors can ADD this stock to their portfolio with a 12-month price target of Rs 318, a 50% appreciation from current levels.
Lakshmi Energy and Foods Ltd:
Lakshmi Energy and Foods Ltd. (LEAF) is the largest integrated non-basmati paddy processor in the world with combined installed capacity of 225 MT per hours. It is expected to produce nearly 220 mn units of power in a year with PLF of 72%. The company would be using nearly 15% of the power generated for captive purpose and remaining 85% would be sold to Punjab Electricity Board at Rs3.59 per unit. The use of husk as bio-fuel for power generation would yield 1.4 Lakh CAR (Carbon Credit) under Kyoto protocol which translate into a revenue of Rs10-12 crore per year form FY10 onwards.
It has embarked a capex of Rs800-1000 crore over next 4 years to double its existing paddy processing capacity to 350 MT per hours (2 MMTPA) and also substantially raise its other by-product processing capacities like rice bran, solvent extraction; edible oil refining and de-oiled cattle feed etc
At CMP of Rs210, Lakshmi Energy & Foods Ltd is trading at a PER of 9.7x of TTM March 2008 earnings whereas on EV/Sales and EV/EBITDA it quoting at 1.5x and 7.1x respectively. The company is expected to report FY09E EPS of Rs 24.1. At P/W of 12x, one can expect a the stock to rise to Rs 290.