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Market outlook and stock idea:-WPIL Ltd
Saturday, March 10, 2012
Story:WPIL Limited engages in the design, development, manufacture, marketing, installation, and servicing of pumps.The company’s products include vertical turbine pumps, vertical mixed flow and axial flow pumps, submersible pumps, horizontal centrifugal pumps, and iron castings. Its products are used in water supply, barge pump stations, irrigation, thermal power plants, fire fighting, sea water, mining and offshore, nuclear power plants, and river water pumping applications.So its a pump making company which was earlier known as Worthington Pumps India ltd.Few years back the company got taken over by Mr.Prakash Agarwal of Hindusthan Udyog limited.The open offer was at Rs 60.They hold nearly 75 % stake in it.The main reason why I like this company is because they have a JV with CLYDE WATER PUMPS UK,a multibillion dollar multinational PUMP making company.They have agreed to manufacture PUMPS for SUPER CRITICAL THERMAL POWER PLANT's in INDIA which currently NO ONE MAKES.India doesn't have the technology to make those pumps.CLyde has also given a commitment to outsource its major orders to INDIAN facility.They have also agreed to have a technology transfer to manufacture Pumps for Nuclear Power plants in INDIA.WPIL also recently acquired UK based 'Mathers Foundry' which is in the business of making steel castings used in equipment for the oil and gas,nuclear, paper, chemical and power generation sectors.Mathers is the sole manufacturer of castings in the ZERON range of Super Duplex alloys .ZERON is a super duplex stainless steel that resists all forms of corrosion attack in seawater service.WPIL's thrust in waste water treatment ,mining and power plant related pumping systems has got a major boost from this acquisition.Both the developments should catapult the company in the top major league.The company's fundamentals have already improved and bear testimony to the fact the business is on track.A reality glance through the insider trading statistics given in bse shows management is aggressively buying the shares from the open market.Check out the below given link of bse to get aware of the confidence the management is having(http://www.bseindia.com/Insidetrade_ScripWise.asp?scripcd=505872).This Year I am expecting a 60 % growth in their revenues to around 350 crores and NP of around 25 crores giving it a EPS of around 31.For a growing company with an amazing business model in place even if I assign a 13 odd PE the target price comes at 412rs.A gem of a buy at present levels.Just go for it.
Todays update:In just a matter of 4 months, the company has hit a high of 420rs today(superior to the target price of 412rs),which is up by over 105% from its recommended level of 206rs and looks good for even more.Enjoy the ride members.
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