This stock was first recommended by us on 29th August 2023 at 520 and we booked profits around 800
on 29th December 2023. Now stock has corrected from 860 levels to 700 levels giving us a golden
opportunity to add for short/medium/long term.
NAME :- TECHNO ELECTRIC
MCAP :- 7595 CR.
CASH ON BOOKS :- 1250 CRORE(31ST DEC2023)
CMP : 710
BUYING RANGE :- 700-730
CONVICTION : VERY HIGH.
CAN BE HIGHEST ALLOCATION IN YOUR PORTFOLIO.
ABOUT THE COMPANY :-
Techno Electric & Engineering Company Ltd. (TEECL) is one of India’s most prominent power
infrastructure companies with a distinguished history of 4 decades. Specializing in Engineering,
Procurement, and Construction (EPC), asset ownership, operations, and maintenance services in
power infrastructure industry AND now company is also getting big orders for smart meters and they
are about to start their first 24MW Data center in Chennai where they have invested 1400 crore.
As per latest letter to shareholders which was for fund raising company has informed that order
backlog has now reached 6000 crore and execution is on fast track. In next 12 company plans to
start another 2 data center of 25 mw each and in 3-4 years company plans to have total capacity of
250 MW. When capacity reaches 250 MW this data center business alone will be valued above
30,000 crore vs current enterprise value of 6250 crore. Company also has other EPC and other
power sector related business where already big capex is going on.
Let us now look at various vertical of the company :-
Techno electric is one of the most attractive company in Electro-mechanical
works in India.
1.POWER GENERATION
Energy consumption is all time high in the country today, and by 2030, the company is targeting
a per captia consumption will be 1750 to 2000 units as against 1250 now. As energy
consumption is concerned with china plus one, auto industry is coming back to india, it will fuel
an insatiable demand for power and thereby leading to demand for all segments of power,
power generation, power transmission, reforms in power distribution, as well as business in
power consuming industry with capex being back.
India`s power demand is expected to clock not less than 7% over a period of five years,
presently it is at around 10%. This has brought a new focus on renewable energy. GOVT. is also
planning to bring back the conventional energy to the extent of 80-90 gigawatt. So, the
business will be happening in both conventional and renewable energy. The govt.has already
set a target of 500 GW
- TRANSMISSION & DISTRIBUTION
AS, the govt. has set a target of 500 gigawatt of renewable energy, this also means creating a
transmission network to handle this 500 gigawatt of renewable energy which identifiesvarious
transmission network compressing of almost 4 lakh of transforming capacity and no less than
50,000 per kilometers of light . this is a very big positive for the company. - DATA CENTER
As the consumption of data is growing everyday in our country, at present the company is
having 700 megawatts of data centers in the country, which is likely to be atleast 2 gigawatts by
26 and it can grow to 5 gigawatts by 2030. India actually offers a very attractive energy cost
today apart from stability of supply compared to southeast asia or Europe, so it may lead to
happen that large operators in this space would like to locate their data center in india. The
increasing adoption of AI,5G, virtual realty will revolutionize the enterprise technology market
and benefit data centers.
Techno electric is in advanced stage of setting up a data center of 24 megawatt IT load and 40
megawatt of grid load at Chennai and phase 1 should start by end of April 2024. Due to induction of AI, the datacenter business is stongly backed, the company is confident and is expecting of achieving 250 mw in next 4-5 years.The company is very well placed to capitalized on this opportunity.
4.SMART METER
In the metering segment, the company is expecting orders of 2000 cr. Year on year. the
company is already executing a smart meter business in the state of J&k for 2.5 lakh meters
which is going to complete by the end of Q4 and in addition they have got another order to
install about 7.25 lakh meters in the state of J&K. They have also backed order to install 5 lakh meters in the city of indore and indore discoms. Right now they are L1 in Tripura, and the company is expecting order very shortly for another 4 lakh meters in the state. They are also participating in business in the state of Rajasthan, Jharkhand for smart meters and the company is expecting that by the close of the year they will
have additional business of about a million meter more. This is a huge business opportunity for the company that has never seen before.
The company`s un-executed order book as on date is at all time high at 6,000 cr. The company placed L1
in another business of almost about Rs.1700 cr.comprising orders from Power grid, Business one in
partnership with Indigrid, orders from Adanis.
The company is very well placed at the moment and with a lot of merits, they are financially strong with
undeployed cash of Rs.1250 cr. at the moment. With a view of expanding order book in the near future
and expansion of business .We can expect topline to be 600-650 cr for this coming quarter that is Q4
FY24 and EBIDTA of close to 105-110 crore. From here on one can expect a minimum downside for this
business, For next year that is FY25 one can expect topline to be around Rs.2600-2800 (conservative)
And for the coming years for FY25-26 the topline can be around Rs.3500-4000 cr On conservative basis and PAT of 500 crore ++.We @Dialwealth expect company to cross its previous high of 860 post Q4 numbers and stock has allpotential to give multibagger returns to its medium to long term investors.
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