HBL Power Systems Ltd (CMP: 300): Is leader in design, development and manufacture of industrial & specialized batteries, allied electronic products and DC systems in India. DC power systems are used across the world for a variety of application where the traditional power supply system cannot be sustained/supported. It is specifically required in mobile (non-stationary) applications like rail coaches, aviation etc. Therefore company focuses mainly on five key sectors namely telecom, aviation, railways, defense and other industrial segment including oil & gas, power, petroleum, steel etc.
HBL has been supplying various batteries for train lighting, air conditioned coaches, locomotives, signaling and communications. But off late, company has designed and developed wide range of microprocessor based signaling products and power systems to cater to the needs of Indian Railways. This Railway segment is expected to be the major growth driver in coming years, since the railways have embarked upon the modernization programmes of signaling systems all over the country in a phased manner.
For the nine months ending Dec 2007 it has recorded 100% growth in sales to Rs 688 cr whereas PAT zoomed up 125% to Rs 47.50 thereby surpassing the entire FY07 net profit of Rs 32 cr by huge margin. Accordingly it is expected to end FY08 with sales and NP of Rs 1000 cr and Rs 72 cr respectively. This works out to an EPS of Rs 30 on equity of Rs 24.30 cr. At current the script is trading at P/E ratio 9x with the 2008 figures. going forward it is estimated to post an EPS of more then 40 for the financial year 2009. This could be a very good buy chances are bright to reach the 400 in a short span of time.
