Tecpro Systems Ltd

ENAM Securities Direct 19

th
August 2011
ENAM DIRECT
EQUITY RESEARCH
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For private circulation only
Strong Execution Capabilities
Company Background
Tecpro is a leading material handling company in India providing
solutions in coal handling, ash handling as well as in balance of plant
(BoP) and engineering, procurement and construction (EPC) space. It
caters to core infrastructure related sectors like power, steel and
cement etc.
Investment Argument
Power BoP ~Rs. 1,500 bn. Opportunity: Tecpro has scaled up its
business model by entering into turnkey BoP space. With the 12
th

five year plan targeting a capacity addition of 75,000 MW, this
would create an annual BoP opportunity of Rs. 300 bn. over the
next five years. As we approach the 12
th
five year plan, we expect
order inflows to gain momentum and firmly believe that Tecpro
would be a major beneficiary as the company has gained leadership
position in coal and ash handling, which together account for 40% of
the total BoP contract. Tecpro bids for BoP projects in consortium
with VA Tech Wabag and Gammon India.
High revenue visibility on account of huge order backlog: The
company has a robust order book of Rs. 4,222 cr. (as on Jun, 11)
giving revenue visibility for the next 2.1 years (based on FY11
sales). We expect revenue to expand at CAGR of 27% over FY11-13E
driven by this large order backlog.
Foray into waste heat recovery (WHR) segment: Tecpro has
forayed into WHR segment in collaboration with Nanjing Triumph
Kaineng Environment and Energy Company Limited (NTK), China.
It is currently focusing on cement sector to grow this business and
later plans to enter into the steel sector as well.
Valuation
Tecpro has leadership position in coal and ash handling. Moreover,
large order book of 4,222 cr. (2.1x FY11 sales) coupled with strong
execution capabilities will drive the revenue growth for the company.
We have estimated revenue and PAT to increase at a CAGR of ~27%
and ~15%, respectively, through FY11-13E against a respective CAGR
of 71% and 60% over FY07-11. We expect the margins to moderate as
the company would now execute large BoP contracts. We initiate BUY
on the company with a target price of Rs. 322 (based on 9x FY13E
standalone EPS).



CMP (Rs) 261
Target price (Rs) 322
Potential upside 23%
Stock data
No. of shares (cr)
5.05
FV (Rs)
10
Market cap (Rs cr)
1,318
52 week high/low (Rs)
454/214
Avg. daily vol.* (shares)
50,900
BSE Code
533266
NSE Code
TECPRO
Bloomberg code
TPRO IN
Reuters Code
TPSL.BO
* BSE 6 monthly
Shareholding (%)
Jun-11 QoQ Chg
Promoter
52.60 0.00
FIIs
30.71 (1.09)
MFs / UTI
8.03 (0.32)
Banks / FIs
0.03 0.00
Others
8.63 1.41
Price performance
0
5000
10000
15000
20000
25000
Oct-10 Dec-10 Feb-11 Apr-11 Jun-11
0
100
200
300
400
500
BSE_SENSEX Tecpro Ltd

Source: Cline, ENAM Direct Research
Rinki Gureja
rinki.gureja@enam.com
Financial summary (Standalone)
Y/E Mar
Sales
(Rs cr)
PAT
(Rs cr)
EPS
(Rs.)
Change
(YoY %)
P/E
(x)
RoE
(%)
Post-tax RoCE
(%)
EV/EBITDA
(x)
DPS
(Rs)
2010 1,454 108 24.5 37 - 42.2 24.0 - 3.0
2011 1,968 136 27.0 11 - 26.5 17.4 - 3.0
2012E 2,618 149 29.6 9 9.1 20.1 14.9 5.9 3.0
2013E 3,155 181 35.8 21 7.5 20.3 15.0 5.2 3.0
Source: Company and ENAM estimates
BUY




19
th
August 2011 ENAM Securities Direct 2
Tecpro Systems Ltd
COMPANY BACKGROUND
Tecpro was incorporated in 1990 and is promoted by Mr. Ajay Kumar Bishnoi and Mr.
Amul Gabrani who have more than 25 years of experience in the material handling
industry. Tecpro is an established material handling company providing solutions in coal
handling, ash handling as well as in balance of plant (BoP) and engineering, procurement
and construction (EPC) space. It started operations in the material handling business in
2001 and has executed 1,042 material handling orders up to March 31, 2010. It caters to
industries like power, steel and cement. It has secured the leadership position in coal
handling and is a third largest player in ash handling (based on orders placed for XI five
year plan).
Tecpro has moved up the value chain with its foray into the turnkey BoP and EPC contracts
in the thermal power generation sector. It received its first BoP contract worth Rs. 993 cr.
by the Chhattisgarh State Power Generation Company for a 1x500 MW thermal power
plant at Korba West in August 2009 through a consortium led by Tecpro. It has also won
two large BoP orders worth Rs. 1,978 cr. from APGENCO for Kakatiya and Rayalaseema
thermal power project.
Tecpro has four manufacturing facilities: three in Bhiwadi, Rajasthan and one in Bawal,
Haryana. It manufactures stackers, reclaimers, crushers, screens, feeders and fabricated
structures at Bawal, Haryana and pulleys, idler, rollers, structures, feeders, screens,
conveyor systems, crushers and screen parts at Bhiwadi, Rajasthan. The company also has a
casting unit in Bhiwadi, Rajasthan for both material handling and ash handling equipment
and a manufacturing unit of ash handling equipment in Bhiwadi, Rajasthan. It has entered
into technical collaborations and license agreements with several international companies
to strengthen its technical credentials and to get an access to advanced technologies.
Tecpro, through its subsidiaries, is also present into other business segments like supplying
equipment for air pollution control and providing turnkey solutions for waste processing
and biomass power generation. As these businesses have negligible contribution to sales,
we have valued the company on standalone basis and our target price does not reflect the
value of these businesses.
The company has an order book of Rs. 4,222 cr. as on June, 2011. The revenue and PAT has
grown at a CAGR of 71% and 60%, respectively over FY07-11. The ROE stood at 27% in
FY11.
Order Book- Sector wise break up Order Book- Segment wise break up
5%
6%
6%
83%
Power Steel Cement Others

45%
8%
47%
Material handling Ash Handling BoP

Source: Company





19
th
August 2011 ENAM Securities Direct 3
Tecpro Systems Ltd
INDUSTRY
Power BoP- The way ahead
Most of the materials handling companies are scaling up their business model by entering
into turnkey BoP space in the thermal power generation sector. This strategy augurs well
for these companies given the huge potential in the power BoP space which is pegged at
Rs. 1.5 tn over the next five years. BoP contracts include coal and ash handling solutions,
setting up of cooling towers, switchyard and plant electrical, water treatment plants and
other auxiliary civil constructions. While Tecpro, Sunil Hitech and McNally have already
won turnkey orders, Elecon and TRF are still vying to make an impact in this space.
Break-up of coal based power plant cost
Power generation equipments are divided in 2 broad categories- BTG and BoP.
Component %
BTG 50%

BoP
Coal handling 10-12%
Ash handling 5-6%
Water treatment and cooling tower 5-6%
Civil works 10-12%
Others 16-17%

Total plant expenditure 100%
Source: Crisil
Coal Handling- CHP handles coal from the unloading stage to transporting it to the
boiler and storing it in bunkers. It also processes raw coal to make it suitable for boiler
operation, i.e. covers receipt of coal from coal mines, weighing of coal, crushing it to the
required size and transferring the coal to various coal mill bunkers. Major equipment
used in CHP are wagon tipplers, stacker-reclaimers, conveyor belts, coal crushers and
dust extraction systems. The construction period for a CHP is 18-24 months.
Ash Handling- AHP refers to the system of collecting fly ash and bottom ash generated
when coal is burned. The volume of ash to be handled at Indian power plant is high as
they use Indian coal having high ash content (around 40 per cent). Ash generated can be
utilized in brick manufacturing, in roads, cement etc. The gestation period for an AHP is
12-18 months.
Water Treatment plant- The water treatment system mainly consists of systems to
transport water from the source to the plant, PT plant and DM plant. PT plant produces
clarified water to meet the requirement of water applications of the power plant, viz.
cooling tower make-up, service water and input water for producing potable and DM
water. DM plant is meant to supply demineralised water to the plant. The gestation
period for water systems is 12-18 months.




19
th
August 2011 ENAM Securities Direct 4
Tecpro Systems Ltd
Cooling tower- Cooling towers are heat removal devices that transfer process waste heat
to the atmosphere. It evaporates water to remove process heat and cools the water. The
construction period of a cooling tower is 18-24 months.
The slated capacity addition as per the 12th five year plan is 100,000 MW, of which,
thermal capacity is expected to be around ~75,000 MW. This would imply a BoP
opportunity of ~Rs. 150,000 cr over the next five years, implying an annual opportunity
of Rs. 30,000 cr.
Thermal power BoP opportunity

Total Opportunity
over next
five years (Rs. cr.)
Annual
opportunity
(Rs. cr.)
Thermal power addition expected in 12th 5-year plan (in MW) 75,000
Project cost of 1 MW (in Rs. cr.) 4.5
Total capex required (in Rs. cr.) 337,500
BoP as % of total outlay 45%
BoP opportunity (Rs. cr.) 151,875

Coal handling 41,766 8,353
Ash handling 18,984 3,797
Water treatment and cooling tower 22,781 4,556
Civil works 41,766 8,353
Others 26,578 5,316
Source: Industry, Enam Research

While most of the BoP orders are already placed for 11
th
five year plan; order inflow for 12
th

plan should gain momentum.
BOP requirement under 11
th
five year plan
BOP
BOP's
required
Orders
already placed
Balance BOP
order to be placed
as on 30.6.2010
Coal Handling Plant ( CHP) 51 49 2
Ash Handling Plant ( AHP) 52 50 2
Demineralized Water Plant (DM) 52 48 4
Cooling Tower 99 97 2
Chimney/ Stack 75 74 1
Fuel Oil System( FO) 52 49 3
PT Plant 55 51 4
Total 436 418 18
Source: CEA








19
th
August 2011 ENAM Securities Direct 5
Tecpro Systems Ltd
BOP requirement under 12
th
five year plan
Name of system BOP Requirement
Coal Handling System 148
Ash Handling System 148
DM Plant 211
Cooling Towers 218
Chimneys 77
Fuel Oil System 148
PT Plant 160
Total 1,110
Source: Base paper on key Inputs for Accelerated Development of Indian Power Sector for 12th Plan & Beyond

Industry has low competition intensity with only few approved vendors
As per CEA, there are a limited number of companies in India who qualify for supplying
BoP packages. BoP packages are placed either through multi package route or single
package route. In the turnkey BoP space (single package route); there are only a few
established players like L&T, BGR Energy, Tata projects while other players like Tecpro
and McNally have recently won big orders. Other players like Elecon and TRF are yet to
bag orders in this space.
Considering the limited no. of approved vendors and Tecpros leadership position in coal
and ash handling, we believe that competition in the individual BoP route is also limited.
The number of vendors available for providing key BoP packages as of August, 2009 is as
follows:
Name of BoP
No. of
approved
vendors
Major Players
Coal Handling Plant 8 L&T, Tecpro, TRF, Mc Nally Bharat, Thyssenkrupp
Ash Handling Plant 9 Indure, Mecawber Beekay, DCIPS, Tecpro, Mc Nally Bharat
Demineralized Water Plant 5 Driplex, Thermax, Doshion, VA Tech Wabag, Ion Exchange
Cooling Towers 5 Paharpur Cooling Tower, Gammon Infra
Chimneys 4 Gammon, Simplex, National building Construction Corp Ltd.(NBCC)
Water Treatment Plant 5 Driplex, Thermax, VA tech
Fuel Oil Systems 4 BHEL, M/s Techno Elect. & engg. Co., Unitech, Technofab
Source: CEA, Enam Direct Research














19
th
August 2011 ENAM Securities Direct 6
Tecpro Systems Ltd
INVESTMENT ARGUMENT
Strong foothold in coal and ash handling- Tecpro is an established player in coal
and ash handling with market share of 19% and 15%, respectively (according to 11
th

five year plan order inflow). Moreover, the company bids for orders both via the
multi-package as well as the single package route strengthening its order book
position. Coal and ash handling account for 16-18% of the total project cost. With
capacity addition of 75,000 MW over the 12
th
five year plan, we estimate order inflow
worth Rs. 12,000 cr. annually over the next few years in this segment. With Tecpros
leadership position in coal and ash handling, we have estimated orders inflow of
~Rs. 2,000 cr. annually for this segment.
Coal handling orders placed for 11
th
five year plan
Company No. of orders
Tecpro Systems Ltd. 11
L &T Ltd. 7
Elecon Engineering Co. Ltd. 6
TRF Ltd. 3
ThyssenKrupp Industries India 3
Others* 27
Total 57
*Includes single EPC contracts for BoPs which may have further awarded sub-contracts to the above
vendors; Source: CEA

Ash handling orders placed for 11
th
five year plan
Company No. of orders
The Indure Pvt. Ltd. 12
Mecawber Beekay Pvt. Ltd. 11
Tecpro Systems Ltd.* 9
D C Industrial Plant Services Pvt. Ltd. 5
McNally Bharat Engineering Co. Ltd 3
Others# 19
Total 59
Source: CEA
# Includes single EPC contracts for BoPs which may have further awarded sub-contracts to the above vendors
* Includes orders awarded to Tecpro Ashtech Limited previously known as Mahindra Ashtech Limited, now merged
with Tecpro Systems Limited.




19
th
August 2011 ENAM Securities Direct 7
Tecpro Systems Ltd
Power BoP ~Rs. 1500 bn. opportunity: Tecpro has moved up the value chain by
entering into turnkey BoP space. With 12th five year plan targeting capacity addition
of 75,000 MW, this would create an annual BoP opportunity of Rs. 300 bn. over the
next five years. We expect order inflows to gain momentum as we approach the 12th
five year plan. We believe that Tecpro would be a key beneficiary as the company
has leadership position in coal and ash handling which together account for 40% of
the total BoP contract. Tecpro bids for BoP projects in consortium with VA Tech
Wabag and Gammon India. The gestation period for a BoP project is approx. 30
months.
Tecpro received its first BoP order from Chhattisgarh State Power Generation Co.
(CSEB) for 1x500 MW thermal power project at Korba West. Later, it received two
more projects from APGENCO for Rayalaseema and Kakatiya thermal power
plants. The DOC for Kakatiya is Dec-12 and for Rayalaseema is FY14. We dont see
any execution risk in theses projects as all the clearances are in place and BoP orders
are placed only after the BTG has been ordered. The company has already completed
65-70% of the Korba project while the APGENCO projects are still in initial stages.
We have estimated order inflow of Rs. 1000 cr. annually in this segment.
In order to consolidate its position in the BoP segment, Tecpro is in the process of
acquiring Ambika Projects (India) Pvt Ltd., which is engaged in the business of water
treatment.
Major BoP Contracts
Description
Size
(Rs. cr.)
DOC BTG
Coal
Linkage
Land
acquisition
& Water
allocation
Environment
clearances
Financing
Agency
CSEB
1 x 500 MW
Korba West
993 Jun-12 BHEL

PFC
APGENCO
1X600 MW
Rayalaseema
1263 2013-14 BHEL

PFC
APGENCO
1X 600 MW
Kakatiya
723 Dec-12 BHEL

REC
Source: Company, APGENCO and CSEB
Foray into waste heat recovery segment (WHR): Tecpro has forayed into WHR
segment in collaboration with Nanjing Triumph Kaineng Environment and Energy
Company Limited (NTK), China. In WHR, exhaust gases produced during the
production of say cement is used as a fuel to produce power. The execution cycle for
WHR is close to 21 months. Tecpro will import boiler and turbine from China and
the BoP part will be done by in-house. Tecpro is currently focusing on cement sector
to grow this business and later plans to enter into the steel sector as well. It has




19
th
August 2011 ENAM Securities Direct 8
Tecpro Systems Ltd
already bagged orders from Ultratech and Shree cement and has received enquiries
from other major cement manufacturers.
Client Description Value (Rs. cr.)
Ultratech Cement Waste Heat Recovery Power Plant 203
Shree Cement Limited Waste Heat Recovery Boiler 21
Source: Company
High revenue visibility on account of huge order backlog- Tecpro has a strong
order book of Rs. 4,222 cr. giving revenue visibility for the next 2.1 years (based on
FY11 sales). Power sector accounts for 83% of the total order book. BoP comprises of
47% of the order book post the receipt of huge orders from APGENCO. We expect
revenue CAGR of 27% over FY11-13E driven by this large order backlog.
Major Orders
Client Description
Material handling orders
Jindal India Thermal Power Limited Coal handling system for 2 x 600 MW Thermal Power Plant
Tata Projects Limited, Krishnapatnam,
AP
Coal handling system for 2 x 800 Krishnapatnam Super Critical
TPP
Utkal Alumina Refinery Project
Bauxite handling and secondary crushing plant for 1.5 MTPA
refinery project
NTPC Limited Coal Handling Plant for Pakri Barwadih Coal Mining Block
Steel Authority of India Limited
Erection of the plant and equipment, steel structures,
refractories
Ash handling
NTPC, Vindhyachal Ash handling system package for Stage IV 2 x 500 MW project
Tata Projects, Krishapatnam Ash handling system for 2 x 800 MW power project
Lanco Ash handling plant for 2 x 600 MW at Anpara C
Lilama
Ash handling system for Vung Ang 1 TPP (Vietnam) 2 x 600
MW
BoP
Chhattisgarh State Power Generation
Co
BoP work for 1 x 500 MW Korba West TPP Extn. III
Andhra Pradesh Power Generation
Corporation Limited
BoP work for 1X600 MW Rayalaseema Thermal Power Project-
Stage-IV
Andhra Pradesh Power Generation
Corporation Limited
BoP work for 1X 600 MW Kakatiya Thermal Power Project-Stage
I
Waste Heat Recovery
Ultratech Cement Waste Heat Recovery Power Plant
Shree Cement Limited Waste Heat Recovery Boiler
Source: Company





19
th
August 2011 ENAM Securities Direct 9
Tecpro Systems Ltd
Order backlog
0
1000
2000
3000
4000
5000
6000
FY07 FY08 FY09 FY10 FY11 FY12E FY13E

Source: Company and Enam Direct Research
Technical collaboration with leading companies: Tecpro has entered into technical
collaborations and license agreements with several international companies. This has
strengthened its technical credentials and given it access to advanced technologies.
Recently, the company has entered into an agreement with AC-TEK, USA for
Overland conveyors.
Collaborator Description
Material handling solutions
FAM Magdeburger Frderanlagen und
Baumaschinen GmbH, Germany
Sale, manufacture and service of crushers, rollers and
grinders
MVW Lechtenberg und
Beteiligungsgesellschaft GmbH
Development of secondary fuel production & biomass
handling projects
PEYTEC Material Handling GmbH
Manufacturing Gladiator flip-flop screening machines
and other conventional screens
Siebtechnik GmbH
Manufacturing and selling products including vibrating
screens
Hein, Lehmann Trenn-Und Frdertechnik
GmbH, Germany
Manufacturing Liwell flip-flow screens
Won Duck Industrial Machinery Co. Ltd.
Sale of cone crushers and manufacture of single toggle
jaw crushers
Krusnohorske Strojirny Komorany a.s.
Sale and manufacture of stacker, reclaimers, paddle
feeders and twin rotor sizers
Nanjing Triumph Kaineng Environment and
Energy Co. Ltd.
Execution of Waste heat power projects
Advanced Conveyor Technologies, Inc (AC-
Tek)
Overland Conveyor
Ash handling solutions
GEA EGI Hungary Contracting/Engineering
Co. Limited
Promotion of high concentration slurry disposal system
Xiamen Longking Bulk Materials Science &
Engineering Co. Ltd.*
Dry bottom handling, pneumatic conveying, fly ash
handling and coal mill rejects handling
Source: Company




19
th
August 2011 ENAM Securities Direct 10
Tecpro Systems Ltd
Sales and PAT CAGR (FY11-13E) of 27% and 15%, respectively: We expect revenue
and PAT CAGR of 27% and 15%, respectively over FY11-13E as against respective
CAGR of 71% and 60% through FY07-11. The company has an order book of 4,222
cr. (2.1x FY11 sales).
Stupendous sales growth
0
500
1000
1500
2000
2500
3000
3500
FY07 FY08 FY09 FY10 FY11 FY12E FY13E
Sales
S
a
l
e
s
C
A
G
R
o
f

7
1
%
o
v
e
r
F
Y
0
7
-
1
1
S
a
l
e
s
C
A
G
R
o
f

2
7
%
o
v
e
r
F
Y
1
1
-
1
3
E
0
500
1000
1500
2000
2500
3000
3500
FY07 FY08 FY09 FY10 FY11 FY12E FY13E
Sales
S
a
l
e
s
C
A
G
R
o
f

7
1
%
o
v
e
r
F
Y
0
7
-
1
1
S
a
l
e
s
C
A
G
R
o
f

2
7
%
o
v
e
r
F
Y
1
1
-
1
3
E

Source: Company and ENAM Direct Research


Impressive PAT Growth
0
50
100
150
200
FY07 FY08 FY09 FY10 FY11 FY12E FY13E
PAT
P
A
T
C
A
G
R
o
f 6
0
%

o
v
e
r F
Y
0
7
-1
1
P
A
T
C
A
G
R
o
f
1
5
%

o
v
e
r
F
Y
1
1
-1
3
E
0
50
100
150
200
FY07 FY08 FY09 FY10 FY11 FY12E FY13E
PAT
P
A
T
C
A
G
R
o
f 6
0
%

o
v
e
r F
Y
0
7
-1
1
P
A
T
C
A
G
R
o
f
1
5
%

o
v
e
r
F
Y
1
1
-1
3
E

Source: Company and ENAM Direct Research




19
th
August 2011 ENAM Securities Direct 11
Tecpro Systems Ltd
Higher Working Capital - an industry norm: Tecpro has moved up the value chain
from being a mere material handling company to an established turnkey BoP player.
Payments in these large BoP contracts are generally back-ended, which in-turn leads
to high working capital requirement for this industry. In-line with this industry-
centric phenomenon, the working capital requirement for Tecpro has increased from
31 days in FY09 to 171 days in FY11 resulting into higher debt on the books
(Debt/equity ratio at 1.1x in FY11). We believe that working capital will not be
stretched beyond this and would continue to be in this range of 170-180 days. We
have estimated D/E ratio at 1.1x and 1x in FY12E and FY13E, respectively, and given
the industry scenario we are comfortable with it.
Working Capital days- increasing as company becomes a turnkey BoP player
0
50
100
150
200
FY07 FY08 FY09 FY10 FY11 FY12E FY13E
Working Capital days

Source: ENAM Direct Research
Working Capital days for the industry
0
20
40
60
80
100
120
140
160
180
200
Tecpro
Systems
Elecon Engg TRF BGR Energy Sunil Hitech

Source: Company and ENAM Direct Research; for Sunil Hitech based on FY10 nos, rest are based on FY11 nos.




19
th
August 2011 ENAM Securities Direct 12
Tecpro Systems Ltd
Margin moderation expected as Tecpro undertakes big ticket BoP contracts: We
expect moderation in EBITDA margin as Tecpro executes large turnkey BoP contracts
which typically have lower margins as compared to smaller projects that the
company undertakes. 47% of the companys order book is now accounted by BoP
contracts. As a result, we expect Ebitda margin to stay in the range of 12.5-13.5%,
going forward.

RISKS TO VALUATION
Concentration Risk: Tecpro has received two large orders from APGENCO. These
two orders together account for 41% of the order book. Any delay in execution of
these projects could impact the revenue stream of the company.
Majority contracts are on fixed price basis: A substantial portion of projects are on a
fixed-price or lump-sum turnkey basis. Under such fixed-price or turnkey contracts,
company generally agree for a fixed price for providing engineering, procurement
and construction services for the part of the project. Though, Tecpro has back-to-back
arrangement with its suppliers, the actual expense incurred by company may vary
substantially from the assumptions underlying the bid.
Lumpiness: 60-70% of Tecpros sales is booked in H2. This could be a drag on
margins in H1 as fixed costs are apportioned over a low base.
Higher Working capital: Tecpro has scaled up to become a turnkey BoP player. This
has stretched its working capital requirement as payments in such projects are back-
ended. Any further increase in working capital could negatively impact the
company.







19
th
August 2011 ENAM Securities Direct 13
Tecpro Systems Ltd
PEER VALUATION

Company M-Cap Sales (Rs cr) Net Prof (Rs Cr)
(Rs. cr) FY11 FY12E FY13E FY11 FY12E FY13E
Tecpro Systems* 1,318 1968 2618 3155 136 149 181
Elecon Engg 695 1288 1554 1809 90 87 99
TRF# 400 1114 1341 1533 0.3 38 46
BGR Energy Systems 2493 4750 5220 5715 323 335 346
Mcnally Bharat Engg 424 2252 2748 3273 63 79 100
Sunil Hitech 127 724 856 955 34 30 30

Company EBITDA Margin (%) PAT Margin (%)
FY11 FY12E FY13E FY11 FY12E FY13E
Tecpro Systems* 15 13 13 7 6 6
Elecon Engg 15 15 15 7 6 5
TRF# 2 7 7 0 3 3
BGR Energy Systems 12 12 11 7 6 6
Mcnally Bharat Engg 7 8 8 3 3 3
Sunil Hitech 15 13 12 5 4 3

Company P/E (x) EV/EBITDA (x) RoE (%)
FY11 FY12E FY13E FY11 FY12E FY13E FY11 FY12E FY13E
Tecpro Systems* 10.0 9.1 7.5 6.1 5.9 5.2 27 20 20
Elecon Engg 7.7 8.3 7.2 6.5 5.7 5.0 22 19 19
TRF# - 10.5 8.6 - 8.8 7.4 - 20 19
BGR Energy Systems 7.7 7.5 7.3 5.2 4.7 4.4 34 31 27
Mcnally Bharat Engg 6.7 5.4 4.2 5.3 4.0 3.4 17 23 24
Sunil Hitech 3.7 4.2 4.2 2.6 2.2 2.0 15 12 10
Source: Bloomberg; *ENAM estimates for Tecpro; # Certain exceptional expenses accounted for by company





19
th
August 2011 ENAM Securities Direct 14
Tecpro Systems Ltd
VALUATION
Healthy order backlog at Rs. 4,222 cr. (2.1x FY11 sales) offers high revenue
visibility
Execution of current order backlog to drive revenue and PAT growth of ~27% and
15% CAGR during FY11-FY13E
Scalable business model
Our target price of Rs. 322 (upside 23%) is based on a target P/E multiple of 9x
FY13E EPS

MANAGEMENT EVALUATION


Ajay Kumar Bishnoi
- Chairman and MD
He holds a bachelors degree in commerce from St. Xaviers College, Kolkata and
a master's diploma in business administration with an additional qualification in
material management from the Institute of Management Development and Research,
Pune. He started his career in 1978 as management trainee in Bharat Forge
Limited and has over 31 years of experience in the material handling industry.
Amul Gabrani
- Vice Chairman & MD
He holds a bachelor' s degree in mechanical engineering from Delhi College
of Engineering and a master s degree in business administration from the
University of Delhi. He started his career with Ingersoll Rand in 1981 and has
mor e t han 28 ye a r s of expe r i e nc e i n t he mat er i al ha ndl i ng i ndus t r y.
Kulbhushan Arora
- Chief Financial Officer
B.Sc, C.A., LLB (Delhi Univ.). Has more than 23 years of experience in the field of
finance, accounts, audit and taxation with prior experience at K. Bhushan & Co.
Joined TSL in 2006 and heads the finance and accounts department of the company.
Ajay Kumar Bishnoi
- Chairman and MD
He holds a bachelors degree in commerce from St. Xaviers College, Kolkata and
a master's diploma in business administration with an additional qualification in
material management from the Institute of Management Development and Research,
Pune. He started his career in 1978 as management trainee in Bharat Forge
Limited and has over 31 years of experience in the material handling industry.
Amul Gabrani
- Vice Chairman & MD
He holds a bachelor' s degree in mechanical engineering from Delhi College
of Engineering and a master s degree in business administration from the
University of Delhi. He started his career with Ingersoll Rand in 1981 and has
mor e t han 28 ye a r s of expe r i e nc e i n t he mat er i al ha ndl i ng i ndus t r y.
Kulbhushan Arora
- Chief Financial Officer
B.Sc, C.A., LLB (Delhi Univ.). Has more than 23 years of experience in the field of
finance, accounts, audit and taxation with prior experience at K. Bhushan & Co.
Joined TSL in 2006 and heads the finance and accounts department of the company.

Source: Company




19
th
August 2011 ENAM Securities Direct 15
Tecpro Systems Ltd
FINANCIALS
Income statement- Standalone (Rs Cr)
Y/E Mar 2010 2011 2012E 2013E
Net sales 1,454 1,968 2,618 3,153
Other operating income 5 2 2 2
Total income 1,459 1,970 2,620 3,155

Material Cost 1,088 1,449 1,989 2,411
Employee Cost 63 91 121 146
Contribution (%) 21 22 19 19
Advt/Sales/Distrn O/H 113 133 164 192

Operating Profit 196 297 346 406
Other income 15 16 13 13

PBIDT 211 313 359 419
Depreciation 7 10 14 17
Interest 36 93 122 133
Pre-tax profit 167 210 223 269
Tax provision 59 74 73 89
Adjusted PAT 108 136 149 181
E/o income / (Expense) 2 0 0 0

Reported PAT 110 137 149 181
Balance sheet- Standalone (Rs. Cr)
Y/E Mar 2010 2011 2012E 2013E
Total assets 839 1,425 1,682 1,920
Gross block 140 161 234 284
Net fixed assets 121 133 192 224
CWIP 11 28 0 0
Investments 9 37 37 37
Wkg. cap. (excl cash) 515 925 1,275 1,478
Cash / Bank balance 182 299 175 179
Others/Def tax assets 1 3 3 3

Capital employed 839 1,425 1,682 1,920
Equity capital 44 50 50 50
Reserves 308 628 759 922
Borrowings 487 747 872 948
Source: Company and ENAM Direct Research





19
th
August 2011 ENAM Securities Direct 16
Tecpro Systems Ltd
Key ratios- Standalone (%)
Y/E Mar 2010 2011 2012E 2013E
Sales growth 105.7 35.3 33.0 20.4

OPM 13.5 15.1 13.2 12.9
Oper. profit growth 126.6 51.8 16.6 17.2
COGS / Net sales 78.8 78.2 80.5 81.0
Overheads/Net sales 7.8 6.7 6.2 6.1
Depreciation / G. block 5.2 6.4 6.2 6.2
Effective interest rate 12.4 15.0 15.1 14.6

Net wkg.cap / Net sales 0.2 0.4 0.4 0.4
Net sales / Gr block (x) 16.7 13.1 13.3 12.2

Incremental RoCE 20.9 22.4 11.8 24.0
Post-tax ROCE (%) 24.0 17.4 14.9 15.0
Debt / equity (x) 1.4 1.1 1.1 1.0
Effective tax rate 35.2 35.1 33.0 33.0
RoE 42.2 26.5 20.1 20.3
Payout ratio (Div/NP) 12.1 11.1 10.1 8.4

EPS (Rs.) 24.5 27.0 29.6 35.8
EPS Growth 37.2 10.6 9.3 21.0
CEPS (Rs.) 26.1 29.1 32.4 39.2
DPS (Rs.) 3.0 3.0 3.0 3.0

Cash flow- Standalone (Rs Cr)
Y/E Mar 2010 2011 2012E 2013E
Sources 495 571 271 256
Cash profit 172 262 288 331
(-) Dividends 14 16 15 15
Retained earnings 158 247 273 315
Issue of equity 9 208 0 0
Borrowings 352 237 125 75
Others (24) (120) (127) (134)

Applications 495 571 271 256
Capital expenditure 43 40 45 50
Investments 5 5 0 0
Net current assets 361 409 350 203
Change in cash 86 117 (124) 4
Source: Company and ENAM Direct Research






19
th
August 2011 ENAM Securities Direct 17
Tecpro Systems Ltd

CONFLICT OF INTEREST DISCLOSURE
We, at ENAM, are committed to providing the most honest and transparent advice to our clients. However, given the
nature of the capital markets, from time to time we are faced with situations that could give rise to potential conflict of
interest. In order to provide complete transparency to our clients, before we make any recommendations, we are
committed to making a disclosure of our interest and any potential conflict IN ADVANCE so that the interests of our
clients are safe- guarded at all times. In light of this policy, we have instituted what we believe to be the most
comprehensive disclosure policy among leading investment
banks/brokerages in the world so that our clients may make an informed judgment about our recommendations. The
following disclosures are intended to keep you informed before you make any decision- in addition, we will be happy
to provide information in response to specific queries that our clients may seek from us.
Disclosure of interest statement (As of 18
th
August 2011)
1. Analyst ownership of the stock No
2. Firm ownership of the stock No
3. Directors ownership of the stock No
4. MBD Relationship No
5. Broking relationship No
We are committed to providing completely independent and transparent recommendations to help our clients reach
a better decision.

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