Pratibha Buy Tgt:380/= -Techno.

Overiview:

An SME player in the construction sector, Pratibha Industries has its core competency in designing to distribution of water covering laying of pipelines, WTPs, pump house, etc. This business currently occupies 80% of its 13.2bn order book position. The balance revenue is from urbhan infrastructure project specializes in steel structures for air port, high rise buildings where company wants tot focus on going forward and remaining from real estate projects, thermal power plant construction contracts. With experience in water projects and manufacture of LSAW pipes within the group, Pratibha Industries is setting up a HSAW pipe manufacturing unit with a installed capacity of 90 MTPS at Wads, Near Mumbai. This will also help company to enter the most promising Oil&Gas Pipelines supply and laying business in a year’s time. With the present order book position and foray into pipes manufacturing, the company’s revenues are expected to grow at 62% CAGR over FY06-FY09E.

VALUATION:

To fund the aforesaid projects Pratibha would need around Rs100cr which is expected to get via convertible or nonconvertible debt. Assuming the entire amount is raised through convertible at current market price fully diluted equity would be
Rs18.4cr. At the current market price PRATIBHA is trading at 8xFY08E and 5.5xFY09E earnings which doesn’t factor in its growth in future. ‘BUY’ with 12 months
target price of Rs380 which shows 55% upside to its present price.