Recommendation From Other Elect.Equip./ Prod. Sectors

This section gives a recommendation of a stock having stock margin padding price below Rs 100 with sound fundamentals and expected to give handsome returns over a one-year time horizon

BC Power Controls (BCPCL) 

BSE Code: 537766
CMP: Rs 36.45
FV: Rs 10
BSE Volume: 1,451,168

POWER-PACKED PERFORMANCE! 

HERE IS WHY
Strong bottomline
Attractive valuations
Company enjoys competitive edge 

BC Power Controls (BCPCL) manufactures and trades in copper wires and cables. The company manufactures ferrous and non-ferrous metal items which comprises of wires and cables and handcrafts. It is engaged in manufacturing insulated wires and cables, copper and copper products, and aluminium products. Its products include flexible cables, armoured cables, telephone cables, unarmoured cables, submersible cables, instrumentation cables and shielded cables. Its product portfolio includes armoured and unarmoured cables, etc. It derives 70% of revenue from manufacturing cables and the rest from trading. The company achieved an all-time high performance both in turnover and profits. 

The sector has witnessed a surge in demand for cables and wires and most of the players in the sector have benefited from the rising demand. BC Power Controls has a good reputation and base and the company has been building on improving the quality in a highly competitive environment, especially in bulk orders. The cable and wire market is expected to grow in low double digit due to higher stress on infra, telecom and electrification of villages. 

The company has been taking all the efforts to improve the quality of its products to get more orders at competitive rates. Due to bulk orders and bargaining power, the company is able to quote better rates and maintain high quality and productivity of the products traded. Barring unforeseen circumstances, the company is confident of achieving better results. 

On the financial front, on a standalone basis, the net sales of the company surged by 57.82 per cent to Rs 137.78 crore in Q2FY19, while in the same quarter of the previous year, the net sales stood at Rs 87.31 crore. The profit before interest, depreciation and tax (PBIDT) was reported at Rs 1.78 crore, witnessing a jump of 55 per cent in Q2FY19 as against Rs 1.14 crore in the same quarter of the previous year. The profit after tax (PAT) came in at Rs 0.64 crore, a fall of 24 per cent in the second quarter of FY19 from Rs 0.85 crore accrued in the corresponding quarter of the previous year. 

On the annual front the net sales were at Rs 493.43 crore in FY18, increasing by approximately 40 per cent, while in the previous year, the sales were at Rs 354.09 crore. The PBIDT has advanced substantially by over 200 per cent YoY as it came in at Rs 10.24 crore in FY18 from Rs 3.18 crore in the previous fiscal. The PAT was recorded at Rs 5.03 crore in FY18, depicting an enormous jump of 500 per cent from Rs 0.81 crore. On the valuations front, the company is currently trading at a PE multiple of 37.20 as against the industry PE of 14.25x. The return on equity (ROE) for the company stood at 19.87 per cent, while it peer, Bhagyanagar India’s stood at 11.77 per cent. In terms of return on capital employed (ROCE), BC Power and Bhagyanagar Indias’ stood at 19.98 per cent and 12.19 per cent, respectively. 

The company has been delivering consistent profit growth of 73.49 per cent over the past five years. The company has also reduced its debt level. Going forward, we expect the company to give decent quarterly earnings. Therefore, we recommend a BUY.