This smallcap power related stock zoomed over 100% from its March low

Shares of Techno Electric & Engineering hit a record high of Rs 1,218.75, and were up 9% on the BSE in Thursday's intra-day trade in an otherwise weak market on healthy Q4 performance.

Shares of Techno Electric & Engineering Company (TEEC) hit a record high of Rs 1,218.75, as they surged nearly 9 per cent on the BSE in Thursday’s intra-day trade in an otherwise weak market after the company reported a healthy quarterly performance, with consolidated revenue growth of 40.5 per cent year-on-year (YoY) at Rs 440 crore in the March quarter (Q4FY24).

The company posted profit after tax (PAT) of Rs 77.53 crore as against Rs 5.12 crore in a year ago quarter. Earnings before interest, tax, depreciation, and amortisation (ebitda) came in at Rs 54.4 crore versus Rs 7.1 crore YoY, with Ebitda margin improved to 12.4 per cent against 2.3 per cent YoY (low base).

In the past one month, the stock rallied 26 per cent after TEEC said the company bagged new orders for Rs 4,063 crore in the normal course of business. The market price of the company more than doubled or zoomed 101 per cent from Rs 607.15 touched on March 20, 2024.

TEEC is a recognised company in the power sector. It provides engineering, procurement and construction services to the three segments of power sector including generation, transmission and distribution. The company is also engaged in generation of wind power through Wind Turbine Generators in the states of Tamil Nadu & Karnataka. The company is recognised for its expertise in the domains of light construction and heavy engineering segments across the country’s power sector.

Meanwhile, the company’s order inflow for FY24 came in strong at Rs 7,000 crore, driven by order win in transmission and smart meter segment. Order book stands healthy at Rs 9,200 crore (5.5x FY24 revenue).

TEEC won concession from RailTel for setting up 100 edge data centre on prominent railway stations and is currently waiting for LoA. Order pipeline continues to stand strong with orders expected from T&D segment and smart metering space. Flue-gas desulfurization (FGD) too is witnessing a traction, which was muted for last couple of quarter. Apart from Chennai data center, TEEC has been allotted land parcel in Kolkata to setup data centre, which is next to other big data centre (Adani Connex).

The power sector in India is undergoing a transformative phase, with significant reforms and a convergence of power and energy sectors. The government's focus on strengthening the power infrastructure through Flue Gas Desulphurisation (FGD), future-ready transmission, and smart meters offers growth opportunities.  Additionally, the surging demand for data centres in the digital era opens up new growth potential.

Meanwhile, the management maintained its revenue guidance of Rs 2,500 crore for FY25 and Rs 3,500 crore for FY26, with Ebitda margin to be at 13 per cent. On EPS front management has revised upwards it guidance to Rs 50+ from Rs 45 earlier for FY26, analysts at JM Financial Institutional Securities said in result update. The brokerage firm remains positive on the stock in long run given strong order book, pipeline and expected revenue pickup from Data Centre. It maintains Buy rating on stock with SoTP of Rs 1,485, valuing EPC business at 27x FY26E.