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Friday, May 16, 2008

TRF:-A tata group undervalued engineering hidden gem

Scripscan-TRF Ltd
bse code:505854
Duration-9 months
Traded in-BSE

[Tata group company/robust prospects/emerging blue chip/undervalued star/trf news/trf analysis/trf future outlook/results]

Introduction:TRF manufactures bulk material handling and processing equipment,bulk
material handling systems coke oven equipment,coal dust injection systems for blast furnaces,coal beneficiation systems and port and yard equipment.It caters to diverse industries from power, metallurgy, chemical, mining and cement segments.TRF operates through four divisions-bulk material handling equipment,BMH systems, port & yard equipment and the EPC division.

Would like to put some points for my bulishness in the scrip:-

1)All the industries that TRF services— power, steel, ports, cement, mines, chemical,fertilisers,and construction —have chalked out huge investment plans.This will directly benefit TRF.Corporate India has already announced hugecapital expenditure for the next 4-5 years

2)As per estimates,Rs 22k crore and Rs 262k crore are to be invested in the power and steel sectors between 2006 and 2015. Of this, Rs 42500 crore will beinvested in material-handling activities in this period.This presents huge potential for TRF, which caters to such industries.Coal and ports are also likely to provide anadditional Rs 5k-crore business to material handling companies over 2006-15.

3)TRF now gets its clients to purchase steel,unlike earlier days when the company procured the raw material.This saves it from the vagaries of volatile steel prices and provides more predictable margin.

4)Tisco's acquisition of Corus opens up new global opportunities for
the company.

5)TRF has chosen SAP as the E.R.P.package,implementation of which is in progress.With the Company going live on SAP,the effectiveness of its key business processes sholud improve further,helping it to retain competitiveness.

6)Trf in its quest for new opportunities to expand its business has signed an agreement with Messrs.KocksKrane,Germany,for supplying Shipyard Cranes and Container Cranes.

Conclusion:In FY09 TRF is expectd to register EPS of Rs 80.At cmp of 1000 itsquoting at a P.E OF 12.5X its 09 estimated earnings.Considering the pedigree quality and the buoyant outlook,a great buy.

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