Here are the Brokerage Reviews of
HPL Electric & Power Limited by various Analysts
Angel Broking analyst Shrikant Akolkar said,
On the valuation front, at the upper end of the price band, the pre-issue P/E works out to 25.6x of its FY2016 earnings which is lower compared to its peers. However this discount is justified considering its significantly low ROE, stretched working capital and low profitability compared to its peers. Considering past financial performance and poor visibility on future growth, we rate this issue as NEUTRAL.
Destimoney Securities has the following update,
The company’s working capital financing requirements have gone up significantly from Rs.2.2 bn in FY12 to Rs.3.6bn in FY16 due to surge in debtors days from 110 in FY12 to168 in FY16. The company has no major Cap-ex in coming years. HPL plans to utilize the IPO proceeds to fund the working capital and partly repay the long term loans. We recommend investors to wait for meaningful improvement in company’s return ratio profile and AVOID entry in the stock during IPO
Ajay Pasari of Religare Securities Said,
Even though, there is huge potential for the company to grow in the future, there is intense competition from already well-established players namely, Havells India, Crompton Greaves, etc. At the upper price band of Rs. 202, the stock is available at trailing P/E of 37.8x, which is at a premium compared to its peers
Prabhudas Liladhar analysts Kunal Seth and Samir Bendre said,
At upper band of issue the post money valuation works out to Rs13bn (PE of 26x FY16 proforma earnings) which is discount to peers. We believe improving brand visibility, reducing leverage; strong growth opportunity, lower working capital intensity and improving utilization should help HPL deliver healthy earnings growth over the next few years. “Subscribe”.
IIFL Analyst Tarang Bhanushali said,
Our back of the envelope calculation suggests that the company is available at 14x FY18E P/E at its upper band, which is at a huge discount to peers like Havells, V-Guard and Finolex cables (Avg 27x). Though we believe the company should trade at a discount to its peers due to low return ratios and inferior product mix, the quantum of discount is unwarranted. We believe there is upside room in the stock and recommend investors to Subscribe to the issue.
IndSec Analyst Dhavan Shah has the following review,
On the valuation front, we have considered V-guard and Havells for peer comon. At the upper price band of Rs.202, the stock will trade at 35.5x FY16 earnings post issue. Although the valuations are comparatively lower than V-guard & Havells, which are
trading at 50.6x & 49.5x FY16 earnings respectively, we believe that these are on account of their higher reach among B2C segment. Apart from that, increasing LED market size and adoption of smart meters across domestic market could also help companies like HPL to increase their market share further. We recommend a SUBSCRIBE on the stock however strictly not for listing gains.
