Founded in 1958, in collaboration with a British company Westinghouse, Brake & Signal, Hind Rectifiers is in the niche business of manufacturing power electronics and power conversion. The company which has a long experience in developing, designing and manufacturing power semiconductors, power electronic equipment and railway transportation equipment, is a safe investment bet with prospects of good appreciation. Just consider:
The company has three manufacturing plants—one each at Mumbai, Nasik and Dehradun. At present, the major manufacturing activities are concentrated at the Mumbai plant and the Nasik plant supplements these activities. The two plants at Dehradun cater to the growing needs of railway sector.
Railways which account for about 55 per cent of total sales of the company, are themselves upgrading and moving up the value chain,As a result, the company is confident of getting fresh business from railways which will drive its future growth. At the same time, the company is trying to reduce its dependence on Railways by working directly with large infrastructure players like L&T for their conductor and rectifier requirements for monorail. It has made its presentation to Siemens, Alstom, BHEL etc and is hopeful of more business from these large players.
Last year, the company supplied 2 MW Traction sub-station with rectifier sets for Mumbai monorail which is the first monorail in India. The company is targeting the business of monorail in India and South East Asia for further growth.
The company has received order to supply railway products to Sri Lanka through Rites. It has received enquiries for its products from South East Asia, Europe and North America and is hopeful of getting strong business. In the current fiscal the management expects export sales of about Rs. 10 crore.
Sales from the Dehradun plant, which enjoys certain tax exemptions, are likely to increase to Rs. 40 crore this year, up from Rs. 27 crore last year. The company continues to invest in new products, re-engineering and value engineering with emphasis on increasing the business.
In the six months ended September 2011, sales increased by 29 per cent to Rs. 44.76 crore and the net profit by 66 per cent to Rs. 1.07 crore. The company is planning a capital expenditure of Rs. 10 crore this year, of which Rs. 7 crore will be for machinery and the rest for products and R&D.
In 2011-12, we expect the company to register EPS of Rs. 8. The share trades around Rs. 41. P/E works out to 5.1.
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