Bonanza maintains a `BUY` rating on EMCO with a price target of Rs 115 as against current market price (CMP) of Rs 90 (Sep. 7, 2009).
Jalgaon based EMCO engages in manufacture of small distribution transformers. It is focused primarily in the T&D segment of power sector. It is among the largest manufacturer of transformers in India and a leading player in electronic energy meters and turnkey electrical substation & transmission line upto 765 kv. The company has acquired interests in coal mines and has plans to enter power generation.
Emco has recently entered into a USD 10 million JV with a South African company, Edison Power, for the manufacturing of transformers with an annual capacity of 2000 MVA to manufacture transformers up to 20 MVA/88 KV class.
Emco has tied up with a Japanese company, J Power, which offers solutions for increasing the carrying capacity of a transmission line without putting in bigger transmission towers. Emco has already completed a Rs 130 million pilot project in Ahmedabad for torrent power.
Emco through its subsidiary, Emco Overseas, has recently entered the coal mining business by acquiring 37.50% stake in PT Rabban, Singapore which in turn has an exclusive coal off take arrangement with PT Bina, an Indonesian coal mining company. Emco has invested USD 148 million for the above mentioned stake. The company expects the coal mining activity to contribute in a huge way from FY11 and expects the full fledged commercial operations by the end of FY2010.
Emco plans to foray into thermal power generation. The company planned to initially set up a 300 MW thermal power plant in two phases, in Warora, District Chandrapur, Maharashtra with the total estimated cost of Rs 12.4 billion through its 100% subsidiary Emco Energy. However, this company is recently being sold to GMR Energy for an undisclosed amount; details will be known only with Q2FY10 results in late October.
Shares of the company declined Rs 0.75, or 0.79%, to settle at Rs 93.95. The total volume of shares traded was 297,751.00 at the BSE (Wednesday).
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