Genus Power Infr Update

Genus Power Infrastructures
Cluster: Ugly Duckling
Recommendation: Buy
Price target: Rs803
Current market price: Rs680

Price target revised to Rs803

Result highlights

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For Q3FY2008, the net sales of Genus Power Infrastructures Ltd (GPIL) grew by 25.2% year on year (yoy) to Rs105.3 crore, which was marginally below our estimates.
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The operating profit for the quarter grew by 30.8% to Rs16.5 crore. The operating profit margin (OPM) expanded by 70 basis points yoy to 15.7%, which was in line with our expectation. The OPM improved on account of operating leverage.
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The interest cost increased by 10.7% yoy to Rs4.7 crore while, the depreciation charge declined by 14.7% yoy to Rs1.2 crore.
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A larger contribution from the Haridwar plant (which falls in the tax-free zone) resulted in the lower tax rate of 10.9% for the quarter as compared with 14.7% in the same quarter last year. Consequently, the net profit grew by 59.2% yoy to Rs9.97 crore as against our estimates of Rs10.8 crore.
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The current order book of the company stands at Rs400 crore, which is 1.1x its FY2007 sales. The company is also the lowest bidder for orders close to Rs800 crore.
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For the nine months of FY2008, GPIL reported a spectacular revenue growth of 35.9% yoy to Rs289.6 crore, whereas the profits grew by 67.5% yoy to Rs26.1 crore.