Sunil Hitech Engineers Ltd. (SHEL), an EPC contractor for the power sector, recently bagged projects worth Rs112cr for structural fabrication and erection works including supplies of steel by JSW for 4x300MW thermal power plant. This order has to be completed over the next 22 months. It has an unexecuted order book position of Rs850cr to be executed by end of FY09, providing good visibility.

SHEL is engaged in the niche business of fabrication, erection, testing and commissioning of thermal power plants, accounting for close to 85% of its revenues. The balance 15% revenues accrue from overhauling and maintenance contracts. It recently forayed into EPC contracts for setting up of steel plants and transmission lines, having tremendous growth potential. In order to fund its capital expenditure and working capital requirements, SHEL allotted 3.8mn warrants to promoters, non-promoters and strategic investors.

The company posted strong performance in Q1FY08, registering 51.2% yoy growth in topline to Rs 45.4 crore. OPM expanded by a huge 730bps yoy to 16.7% boosting net profit by 134.9% yoy to Rs3.4 crore. On the back of encouraging quarterly results, healthy order backlog and entry into new high growth segments, SHEL is well placed for the future. We recommend a Buy with a medium term perspective.

Financials (In Rs Cr)

	FY05	FY06	FY07
Net sales	68	133	145
EBIDTA	7	13	18
EBIDTA (%)	10	9.8	12.5
APAT	2	6	8
Equity	6.5	10	10
EPS (Rs)	3.4	5.6	7.6