Genus Overseas Electronics Ltd
BUY
CMP Rs209
Genus Overseas Electronics Ltd (GOEL) is amongst the largest electronic meters manufacturers in the country and the pioneer in implementing Automatic Meter Reading (AMR) technology in metering. GOEL stands to be the largest beneficiary of the on going Accelerated Power Development and Reform Program (APDRP), under which the government intends to implement 100% metering. Coupled with this the government also plans to provide electricity to all households in the country, which will be metered. The company has an order book of Rs4bn, which comfortably covers it for FY07 with a partial spill over into FY08.
The meters division is expected to witness 111.3% CAGR over the next couple of years, which will be mainly driven by the governments focus on rural electrification and implementation of APDRP under which it emphasis on 100% metering. This division has an executable order book of about Rs2.2bn.
GOEL diversified into manufacturing inverters and undertaking power distribution projects where meter requirement is high. This exposes the company to huge investments in the T&D space that is being outlined by the government. Its access to sophisticated technology for AMR will give it an edge over its peers while bidding for metering projects.
We expect the company to register a topline and bottomline growth of 52.5% and 58.6% CAGR respectively over FY06-08E. GOEL is currently trading at 10.7x and 7.2x times its FY07E and FY08E earnings of Rs19.6 and Rs28.9 respectively. We recommend a BUY with a one year price target of Rs269, an upside of 39%.