Shares of one of the world’s leading manufacturers of Power Transmission & Distribution structures surged 15.7 percent on BSE to hit a new 52-week high at Rs. 513.9 on Tuesday. This rally was sparked by Nuvama Institutional Equities’ initiation of coverage on Skipper Limited with a bullish outlook.
With a market capitalisation of Rs. 5,659.8 crores, the shares of Skipper Limited closed in the green at Rs. 501.15, up by nearly 12.8 percent, as compared to its previous closing price of Rs. 444.
Brokerage Target:
The domestic brokerage firm Nuvama Institutional Equities initiated a ‘buy’ rating on Skipper Limited and assigned a target price of Rs. 650 per share, representing a potential upside of nearly 30 percent from Tuesday’s closing price of Rs. 501.15.
Brokerage Outlook:
The brokerage noted that Skipper is well-positioned for strong performance within the transmission and distribution (T&D) ecosystem, fuelled by the proposed National Electricity Policy (NEP).
The NEP 2032 outlines a strategy for developing central and state transmission systems to meet the projected peak power demand of 458 GW by 2032, with a total capex of nearly Rs. 9.2 lakh crore (or Rs. 9 trillion) from FY22 to FY32.
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The global shift toward renewable energy (RE) is also expected to significantly enhance growth in high-voltage transmission and distribution (HV T&D) capital expenditures.
In addition, Skipper is likely to benefit greatly from favourable domestic and export order intake tailwinds.
Nuvama predicts a compound annual growth rate (CAGR) of 22 percent for order inflow, 26 percent for sales, and 50 percent for earnings per share (EPS) from FY24 to FY27, with an EBITDA margin anticipated to reach 10.5 percent by FY27.
Skipper’s operating profit margin (OPM) is projected to increase from 9.7 percent in FY24 to 10.5 percent by FY27, with plans suggesting a target of 11 percent within the next three years.
Furthermore, the company aims to double its tower manufacturing capacity to 600,000 MTA from the current 300,000 MTPA, with an investment of Rs. 800 crore planned over the next four to five years.
Skipper is distinguished as the only company with backward integration, encompassing rolling mills, production of tower pole fasteners, and EPC capabilities.
Financials:
The company reported a growth in revenue from operations, experiencing a year-on-year rise of nearly 96.8 percent, from Rs. 555 crores in Q1 FY24 to Rs. 1,092 crores in Q1 FY25.
Similarly, net profit increased from Rs. 16 crores to Rs. 32 crores during the same period, reflecting a growth of 100 percent YoY.
Stock Performance:
The stock has delivered multibagger returns of nearly 129 percent of returns in one year, and around 52.3 percent of positive returns in the last six months. So far in 2024, the shares of Skipper Ltd. have given multibagger returns of about 117.6 percent.
About the company:
Skipper Limited is engaged in the manufacturing and selling of Transmission & Distribution structures (towers & poles), telecom towers and fasteners within its engineering products segment. Its polymer segment encompasses a range of products such as PVC, HDPE, CPVC, UPVC, SWR pipes and fittings, water tanks, bath fittings, and other related items.
The company is a prominent manufacturer of Telecom and Railway structures and also undertakes Engineering, Procurement, and Construction (EPC) projects as part of its infrastructure segment.
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Written by Shivani Singh
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