STOCK TO WATCH ; A good bet for medium to long term.

IMP Power (125.00) has come out with good set of nos for the June’09 quarter. Sales as well as PBT increased by 70% to Rs 52 cr and Rs 7.2 cr respectively. Due to lower tax provisioning its PAT quadrupled to 6.30 cr for the quarter. Thus for the full year ending June 2009 it recorded 40% growth in sales to Rs 190 cr and 70% increase in NP to Rs 15.70 cr posting an EPS of Rs 19 on equity of Rs 8.10 cr. Company is engaged in manufacturing of entire range of power & distribution transformers, electrical & digital measuring instruments, testing equipments etc. It has vendor approval from almost all the State Electricity Boards, major turnkey EPC contractors and the only transformer company in India to be in zero sales tax zone enjoying 15 year sales tax holiday which shall continue till year 2012. Secondly, it has achieved backward integration through manufacturing of OLTC & RTCC in house thereby emerging as one of the lowest cost manufacturer of transformers. To cater to the rising demand and increase its market share, company has last year doubled its production capacity from 3,600 MVA to 7,000 MVA. Further its in the midst of expanding it to 10,000 MVA in the current fiscal itself. Post this completion, company will be among the very few transformer manufacturers having the capability to make EHV power transformer up to 200 MVA in 330 kV class. Besides, company has also upgraded its Kandivali plant to manufacture complete range of analog meters in addition to high end meters like maximum demand indicator, trivector meter, multifunctional and kWh Meters. Recently company converted the preference share into equity shares @ Rs 161 per share thereby diluting the equity by 20% to Rs 8.14 cr. For FY10 ending June’10 it may report sales of Rs 250 cr and NP of Rs 18.25 cr i.e. EPS of Rs 22 on current equity. For FY11 it has the potential to post an EPs of Rs +30. A good bet for medium to long term.