Transformers & Rectifiers a good bet: Deven Choksey, KR Choksey Securities

Deven Choksey, MD, KR Choksey Securities, in a chat with ET Now talks about Transformers & Rectifiers.

Transformers & Rectifiers, what capacity transformers are they making? Have they benefited from the fall in copper prices?

Yes. They have expanded their capacity from 7000 MVA to 16000 MVA and have expanded the capacity for the higher range of transformers to 400 KVA plus. Of course the copper is the physical input for this company but at the same time, most of the contracts that they have, they are basically having the cost escalation built into it.

So from that perspective if you look at it, they are unlikely to get hit because of the fluctuation into the raw material prices and if you look at this company, it is showing you a kind of a growth traction once again domestically as well as in exports. They have very sound order book position. At the same time on the valuation front if you look at it, it is once again available at a valuation not very expensive, just around 10 times to its forward earnings estimate. So we like this company for a 50% appreciation over 1-1.5 years time.