Play on huge power investments:Genus Power Infrastructure Ltd (Genus) is a play on significant investments planned in the power sector. Company manufactures electronic meters, power inverters and undertakes turnkey projects. Genus provides closed loop metering solutions that offer operational advantages to energy utilities enabling reduction in T&D losses and thereby enhancing their revenues.Power sector reform to drive momentum:
Implementation of the APDRP scheme, under which the government needs to implement 100% tamper proof metering, is expected to result into higher demand for meters over the next couple of years. Genus has an order book position of Rs 4.17 billion including turnkey projects. Company has participated in tenders more than worth Rs 48.4 billion, of which, it is the ´L-1´bidder in orders worth Rs 4.5 billion.
Tax exemption and JV with Mobix to accelerate growth:
The company's second manufacturing facility in Uttaranchal (first being in Jaipur), enjoys 16% excise duty exemption for a period of 10 years, and increases the capacity from 1.4 million to 2.4 million pieces. Joint venture with Mobix has provided Genus the platform to enter high demand markets like Latin America, Africa, etc. We expect the JV to contribute 10%-15% to company's revenues going forward. The company is already doing pilot projects in Brazil for the past two years and has got all necessary approvals.
Valuation and Recommendation:
Genus posted a healthy revenue growth of 19.9% yoy in Q1 FY09. The operating margin expanded by 50 bps yoy to 16.9%. PAT stood at Rs 85.4 million vs Rs 69.2 million in Q1 FY08, an increase of 23.4% yoy. The company is expected to witness robust revenue and earnings growth driven by significant investments planned towards the addition of 78GW generation capacity in the 11th Five Year Plan.
Financials:
| March (Rs Cr) | FY07 | FY08 | FY09E |
| Revenues | 357 | 483 | 713 |
| YoY growth | - | 35.3 | 47.5 |
| Operating profit | 55 | 84 | 118 |
| OPM (%) | 15.3 | 17.4 | 16.5 |
| PAT | 28 | 52 | 77 |
| YoY growth (%) | - | 85.9 | 48.8 |
| EPS (Rs)* | 19.7 | 36.4 | 54.5 |
| P/E (x) | 15.8 | 8.6 | 5.7 |
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