Scripscan:TIL Ltd
cmp:235
Code:505196
Story:TIL Limited, together with its subsidiaries, operates as a dealer of Caterpillar products primarily in north and east India, and Bhutan. The company provides a range of construction and mining equipment, including hydraulic excavators, backhoe loaders, wheel loaders, off-highway trucks, track-type tractors, asphalt pavers, vibratory soil compactors, asphalt compactors, motor graders, and wheel dozers. It also offers Caterpillar range of engines and generator sets, such as C175 diesel generator sets, C9 ACERT engines, 3512 B engines, C32 ACERT diesel engines, and G 3306 gas engines, as well as assembles, erects, and commissions generating sets powered by Caterpillar engines. In addition, the company designs, manufactures, and markets various equipment comprising rough terrain cranes, truck cranes, lorry loaders, truck mounted cranes, crawler cranes, tower cranes, all terrain cranes, reach stackers, forklift trucks, and container handlers for material handling, lifting, port, and road building solutions. Further, it provides equipment and project solutions consisting of high frequency screens, stationary plants, track plants, portable plants, hot mix double barrel asphalt plants, RTG cranes, road headers, ELL cranes, mechanical drive chain trenchers, and horizontal directional drills. Additionally, the company offers product support and services, including pre–purchase consultancy, equipment investment analysis, field service management, scheduled oil sampling services, component repair and complete machine rebuilds, rental and used equipment solutions, and customer support agreements and maintenance and repair contracts, as well as maintenance and operator training for customers. It primarily serves general and heavy construction, mining, agro, power, port and airports, railways, oil and petrochemicals, defense, retail and hospitality, and health and pharma industries.Due to delays in infra spending by government, TIL was forced to aggressively sell its products in the market place. TIL needs to place purchase orders to Caterpillar, for its sales requirement in India, well in advance. Based on its estimates of the demand expectation for the projects in mining, construction, road & other infrastructure sectors, TIL builds it inventory position. However, due to delay in finalization of some road projects & slower pace of mining activities, the expected demand did not materialize. Since the government spending is yet to pick up, TIL may resort to aggressive sales push in Q3FY12 as well. However, it is taking steps to reduce its working capital and expects demand environment to improve in H2FY12 especially for Road & construction projects. Considering its Q2FY12 performance,I have reduced my FY12E & FY13E estimates.I expect its consolidated Revenues to grow by 18.4% in FY12E to Rs. 16,341.7 mn & by 16.5% in FY13E to Rs. 19,043.1 mn, while its APAT to decline by 7.9% in FY12E to Rs. 554.2 mn, but to grow by 23.1% to Rs. 681.9 mn in FY13E.At CMP of Rs.235, the stock is trading at an attractive valuation of 3.4x its FY13E EPS of Rs.68.A great long term bet.
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