ISGEC Forms New JV with Foster Wheeler (500% Up from 1st Reco)

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  • Update Report
  • 5-Jan-2015

ProsperoTree.com first recommended ISGEC Heavy Engineering at Rs. 950 - Rs. 1050.



The Reports Published on ISGEC are as below:



1. First ISGEC Report at price of Rs. 1,000 (https://www.prosperotree.com/investment-ideas/83-isgec-heavy-engineering-ltd).


2.Second ISGEC Update at price of Rs. 3,200 (https://www.prosperotree.com/investment-updates/212-isgec-remains-a-powerful-investment-after-220-returns) where prosperotree.com recommended investors to hold and new investors to add at price of 3200.



Since then ISGEC has seen a further rise where the stock has crossed Rs. 5800, making it a nearly 6x (500% Returns) in less than a year of first recommendation.



Though the price run up has been massive, we think there is enough juice left considering its future prospects. It is only now that ISGEC will start coming in the radar of many large HNIs and institutions. In case if ISGEC maintain its recent run rate of growth in sales and net profit, ISGEC still remains very attractive for long term investments for institutions who have comparatively modest returns expectations.



We recommend to hold through your ISGEC investments even though there could be some temporary correction as the stock price has moved up very sharply.



Some other pointers: 1. New JV with Foster Wheeler: In continuation of its technology partnership with foster wheeler, ISGEC has now established a JV with Foster Wheeler for participating in tenders of small sized boilers across the world (below 150 MW). This JV will further unlock another set of opportunities for long term high margin growth for ISGEC over and above its current business.



2. JV with Hitachi Zosen: Based on our feed back from the ground, ISGEC Hitachi Zosen JV is doing quite well and may surprise many investors when the final FY15 consolidated results are announced. Though the JV was established since 2011, the revenue from the JV will only begin to accrue in FY15 (current year).



3. Order Book remains strong: The order book of the company remains quite strong with some factories having excess orders beyond its capacity to produce. This may lead to overall increase in margins in the coming quarters.



Though the future returns in ISGEC may moderate a bit, however, ISGEC is at a very nascent stage of discovery and we therefore remain fairly bullish and recommend to hold the same.



Historical Price Performance


 


DISCLOSURES by RESEARCH ANALYST UNDER SEBI (RESEARCH ANALYSTS) REGULATIONS, 2014 is as under:


• Introduction: Prospero Tree Financial Services is an independent equity research proprietorship firm of Mr Dhruvesh Sanghvi.
• Business Activity: Prospero Tree Financial Services is committed in providing honest views, opinions and recommendations on financial markets opportunities.
• Report Written by: Dhruvesh Sanghvi
• Disciplinary History: None
• Terms & Conditions: https://www.prosperotree.com/termsofuse
• Details of Associates: Not Applicable
• Disclosure with regards to ownership and Material Conflicts of Interest:
1. Neither Mr Dhruvesh Sanghvi, Prospero Tree Financial Services, its associates, nor its Research analysts have any position in the subject company. However, his relatives holds the shares of Balaji Telefilms.
2. Neither Prospero Tree Financial Services, its associates, Research Analysts, nor its relatives, have more than 1% ownership of the subject company at the end of the month immediately preceding the date of publication of this report.
3. Neither Prospero Tree Financial Services, its associates, Research Analyst nor its relatives, has any other material conflict of interest at the time of publication of the research report or at the time of public appearance.
• Disclosure with regards to Receipt of Compensation:
1. Neither Prospero Tree Financial Services or its associates, or Research Analyst has received any compensation or other benefits from the subject company or the third party in connection with the research report in past twelve months.
2. Neither Prospero Tree Financial Services or its associates, or Research Analyst have managed or co-managed public offering or securities for the subject company in past twelve months.
• Other Disclosures:
1. The Research Analyst has not served as an officer, director, or employee of the subject company.
2. The Research Analyst is not engaged in market making activity for the subject company.


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