Indiainfoline - Indotech Transformers

Indo Tech Transformers Ltd.

BUY

CMP Rs233

Indo Tech Transformers Ltd is in the process of more than doubling its existing capacity from 2,450MVA to 7,450MVA, including both planned and unplanned expansions. This will enable it to expand its reach coupled with newer and wider range of products.

We expect the company to benefit from the ongoing investments in the power generation and transmission and distribution space by public and private sector. This should translate into stronger demand for transformers which will help the company's bottomline grow at 37.8% CAGR over FY06-08E.

The company recently announced a tie up with DUPONT India Pvt. Ltd. for technical, marketing analytical and business assistance in respect of its Dry Type Transformers.

The stock is currently trading at 15.9x and 11.8x FY07E and FY08E earnings of Rs14.6 and Rs19.8 respectively. We maintain a BUY on the stock with a long term perspective.