BS TRANSCOMM
BS Transcomm is entering the capital market on with a public issue of 76.79 lakh equity shares of Rs. 10 each, in the revised price band of Rs. 248 to Rs. 257, down from Rs. 257 to Rs. 266 per share. Due to low subscription of 0.58 times till 8th October evening (its earlier closing date), the issue will now close on 13th October.
The company is engaged in the manufacture and supply of telecommunication and power transmission towers, sub-station structures and providing service solutions to the telecommunication infrastructure and power transmission sectors. The company had acquired SAPL and subsequent to that, is providing solutions, such as remote site monitoring solutions (intelligent data device) for telecom sector.
Its services in the power sector includes survey, design and setting up of transmission lines for power evacuation on turnkey basis and design and setting up of sub-stations. Product portfolio for the same includes transmission towers, sub-station structures and equipments, insulators, transformers and conductors.
The company is now expanding its telecom and power transmission tower manufacturing capacity from 36,000 TPA to 2,40,000 TPA, as also, setting up a backward integrated structural mill, with installed capacity of 90,000 TPA. This expansion is being carried out in two phases, with first phase having completed and second phase is under implementation.
Phase I for expansion in Tower manufacturing capacity from 36,000 TPA to 1,20,000 TPA, has been completed in March 10, while backward integrated structural mill of 90,000 TPA commenced in September 09. Expansion of galvanizing capacity of phase I will be completed by October 10.
Phase II will expand the tower manufacturing and galvanizing capacity from 1,20,000 TPA to 2,40,000 TPA. Both phases are estimated to cost Rs. 263 crores and the proposed issue is to finance these phases. Though phase I has been implemented partly from bank loans and loan from associate companies, now, the same shall be replaced with IPO proceeds.
For year ending March 10, the total income of the company was placed at Rs.540 crores, with PAT at Rs.23.71 crores, resulting in an EPS of Rs.16.65, on an equity base of Rs.14.20 crores. Break up of the revenue for FY 10, is of Rs.150 crores in traded goods and Rs. 246 crores for Turnkey services.
However, due to the part completion of phase I, by March 10, the company has improved its performance during quarter ending June 10, with total income being placed at Rs.174 crores. This has nil from traded goods while Rs.125 crores came from Turnkey services. Due to this, margins of the company improved, with PAT being placed at Rs.13.36 crores, resulting in an EPS of Rs.9.40 for the quarter.
The present equity base of the company is quite low at Rs.14.20 crores, which will rise to Rs.21.88 crores. Even, post issue, equity looks quite low and the company should be able to post a total income of over Rs. 900 crores for FY11 with PAT at Rs. 56 crores, resulting in an EPS of Rs. 26, on fully diluted basis, on enlarged equity base of Rs. 21.88 crores.
Considering the product profile and present financial performance of the company, share at (revised) upper price band of Rs. 257 also looks good, which can give good returns, if stock is held for 6 months view.