Subscribe to Techpro Systems IPO: Aditya Birla Money
Given the strong performance and superior return ratios, the company should trade at a premium to its peers, the brokerage says.
By ET Bureau |
MUMBAI: Aditya Birla Money has recommended investors to ‘Subscribe’ to Techpro Systems IPO. Given the strong performance and superior return ratios, the company should trade at a premium to its peers, the brokerage says.
“Techpro Systems’ top-line has grown at a CAGR of 70% from FY06-FY10; while operating profits and PAT have grown at a CAGR of 89.7% and 85.8% from FY06-FY10 respectively.
The company’s profitability has grown more than its top-line exhibiting strong operating performance and maintaining healthy balance between debt -to- equity helps the company in delivering superior returns on equity.
In terms of margin company’s operating margin and net profit margin stood at 15.4% and 7.4% way above industry peer average of 11.9% and 4.2% during FY10 respectively.
In terms of return on equity company reported a average RoE of 35% (FY08-FY10) as compared to peer average of 23% (FY08-FY10).
On the higher price band of Rs 355 the stock is trading at 16.5x FY10 diluted EPS of Rs 21.5 while peer average is 17.3x FY10 basis. Given the strong performance and superior return ratios, the company should trade at a premium to its peers, hence we recommend investor to “Subscribe” to the stock,” the report said.
Tecpro has come out with IPO of 75.5 lakh equity shares of face value Rs 10 each and has fixed the price band at Rs 340–355 per share.
The issue closes September 28, 2010. The issue proceeds would be utilised to fund working capital requirements and general corporate purposes.
“Techpro Systems’ top-line has grown at a CAGR of 70% from FY06-FY10; while operating profits and PAT have grown at a CAGR of 89.7% and 85.8% from FY06-FY10 respectively.
The company’s profitability has grown more than its top-line exhibiting strong operating performance and maintaining healthy balance between debt -to- equity helps the company in delivering superior returns on equity.
In terms of margin company’s operating margin and net profit margin stood at 15.4% and 7.4% way above industry peer average of 11.9% and 4.2% during FY10 respectively.
In terms of return on equity company reported a average RoE of 35% (FY08-FY10) as compared to peer average of 23% (FY08-FY10).
On the higher price band of Rs 355 the stock is trading at 16.5x FY10 diluted EPS of Rs 21.5 while peer average is 17.3x FY10 basis. Given the strong performance and superior return ratios, the company should trade at a premium to its peers, hence we recommend investor to “Subscribe” to the stock,” the report said.
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Tecpro has come out with IPO of 75.5 lakh equity shares of face value Rs 10 each and has fixed the price band at Rs 340–355 per share.
The issue closes September 28, 2010. The issue proceeds would be utilised to fund working capital requirements and general corporate purposes.
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