Target: ₹1,681
CMP: ₹1,248.70
Techno Electric & Engineering Company is a leading EPC player in India’s power transmission and distribution (T&D) sector with over 45 years of experience, with a pivotal role in executing NTPC’s first power station at Shaktinagar and constructing more than 50 per cent of Power Grid Corporation of India’s substations (over 160 out of 276), while also participating in nearly all NTPC power station projects.
The company has further expanded into tariff-based competitive bidding (TBCB) projects and signed an MoU with IndiGrid for asset monetisation, alongside diversifying into advanced smart metering (AMI) with contracts exceeding ₹2,600 crore, and entering the fast-growing data centre sector in 2021 with a planned investment of about $1 billion to build 250 MW capacity by FY30; currently, the company has a strong order book of over ₹9,500 crore, indicating a book-to-bill ratio of about 3x, and is expected to deliver robust growth with revenue and EBITDA projected to grow at a 32 per cent CAGR to ₹5,177 crore by FY28E, while PAT is estimated to grow at 19 per cent CAGR moderated by higher depreciation.
We value Techno Electric on an SOTP basis, and initiate coverage with a Buy at a Target Price of ₹1,681 (about 34 per cent upside from the CMP of ₹1,250), implying a P/E of 30x on FY28E earnings. Each business vertical has been valued separately.