Recommendation from Sushil Finance,
Saraswati Industrial Syndicate Ltd. (SISL), a ISGEC Group Company, was established in 1933 as India’s largest Sugar mill. In 1964, it diversified into a range of heavy engineering business and is currently engaged in manufacturing & selling of various products like Process Plant Equipment, Mechanical & Hydraulic Presses, Steel & Iron Castings, Liquefied Gas Containers, Boilers, components & spare parts of Boilers & Sugar Plants, etc. It has manufacturing facilities at Dahej (Guj.), Yamunanagar (Haryana) and Noida & Muzaffarnagar (UP).
SISL supplies its products across the industries such as Oil&Gas, Refinery, Automotive, Steel, Fertilizer, Sugar, Defence, Railways and has many reputed clientele such as Foster Wheeler, Toyo Engineering, LG, Hyundai, Qatar Petroleum, Tata Steel, HUL, RIL, IOC, Siemens, Toshiba, ABB, BHEL, Skoda etc. SISL also exports its products to more than 74 Countries, across 6 Continents.
The Company maintains very high quality standards with all necessary approvals to sell its products in international market. SISL also has licensing arrangements with various global players for technology transfer required for its manufacturing facilities. Over the years, the Company has built & upgraded its engineering & technology capabilities continuously and has strength of 156 engineers.
SISL produces Sugar of international standards through its subsidiary Saraswati Sugar Mills Ltd., which is one of the pioneers in the Sugar industry in India. It has a cane crushing capacity of 13,000 tones of cane per day.
During FY09, its consolidated Revenues increased by 29.3% YoY to Rs.21,111 mn, out of which Revenues from Sugar business stood at Rs. 3,798 mn. The EBITDA margins stood at 10.6% , while EBITDA increased by 107% to Rs. 2,241 mn, mainly due to higher growth in engineering business & sharp increase in operating margins of Sugar business. Its net profit increased by 307.3% YoY Rs. 1,014.2 mn. Going forward, with strong order book and improved economic scenario for infrastructure investments, we expect SISL to deliver decent performance during next two years
At Rs. 1338, the stock is available at an attractive valuation of 7.1x its FY11E Consol. EPS of Rs. 187.5. We believe the stock can get valued at 10x its FY11E Earnings implying a target price of Rs.1875.
