Stock Idea - Precision Wires India Limited (PWIL)

Stock Metrics
BSE Group
BSE Code
Market Capitalization
Face Value
52 Wk High (BSE)
52 Wk Low (BSE)
CMP as on 01st Oct 2014
Accumulation Level

Target Price & Potential Upside

B
523539
Rs. 135 cr.
Rs. 10
Rs. 136.20 ( 16 Sep 2014)
Rs. 51.15 ( 01 Oct 2013 )
Rs. 116.00
Rs. 110 - 120
Rs. 160.00

Precision Wires India Limited (PWIL) was set up in 1989 for the manufacture of Enamelled
Copper Winding Wires. PWIL plants are certified for Quality Management System ISO
9001:2008/ISO TS 16949:2009
PWIL is the largest manufacturer & market leader of Copper Winding Wires in India and uses a
combination of Indian skill and foreign technology to ensure the best possible end-product
quality. It has current installed capacity is over 30,000 metric tons per annum. This capacity is
further being increased with several expansion projects in the pipeline across various product
lines. PWIL has three manufacturing facilities located at Silvassa, Palej (Gujarat) and Palghar
(Maharashtra).PWIL's customers include many large and medium electrical and electronic
equipment manufacturers both in India and abroad. Its wires are widely used in equipments
o
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o
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Rotating machines (manufacturer and repairer)

Alternators
Hermetic motors (for refrigeration and air conditioning equipment)
Power and Distribution Transformers
Control and Power supply Transformers
Ballasts
Auto Electricals
Electric hand Tools
House hold appliances
Fans
Switchgear, relay and magnet coils Instruments and audio coils etc

The Company produces Winding Wires made of Copper which are used in the manufacture of
both rotating and static electrical equipments. It produces winding wires as per various technical
specifications including IEC, IS, BS, NEMA and JIS as well as per specific requirements of their
customers

FY14 Operations.
The overall economic industrial climate was unfortunately sluggish. Electrical Equipment
Manufacturing Industry and Capital Goods Sector registered negative growth. Increasing import
of electrical equipments from China, affected Domestic Industry. Sales & Profit were overall flat
on YoY basis due to above factors
Market Leadership
There are number of players in the Industry including many in small scale industries sector
however due to quality of its products and long standing relationship with OEM customers PWIL
continues to remain Industry-Leader.
Sector Overview
Winding Wires are used in the manufacture of Electrical Equipment .India, being a power-deficit
country, long term prospects of the Electrical Equipment Manufacturing Industry is bright. Since
~ 40 Cr people do not have access to electricity, Power-Sector enjoys utmost priority. Between
now and 2050 Indian electricity supply and demand are projected to increase five fold
Manufacturing sector also is likely to be given priority as the same generates more employment.
Growth in Infrastructure-Sector such as Air Ports, Metros, Highways, surface Transport etc.
besides the Power-Sector, is likely to have catalytic impact on Capital-Goods-Sector.

Risk
Inflation, High cost of finance, lower capacity utilization, inadequate availability of proper Grade
fuel and issues pertaining to environmental clearances along with general slowdown in Indian
economy ,volatility in forex and visibility of Substitution of copper by aluminum, in small
rotating and static electrical equipments
Promoters & Promoter Group holds 59.67% of shares & Shareholding Pattern More than
1% Other than Promoters as of 30th June, 2014.

Name of the Shareholder

No. of Shares held

Shares as % of Total
No. of Shares

KCP Sugar and Industries Corporation Ltd

144,374

1.25

Anita Ravinder Bhandari

Total

134,000
278,374

1.16
2.41

Financials.
Income Statement

FY 13

FY 14

FY 15E

Net Revenue

975.83

981.68

991.50

GROWTH %

0.60

1.00

Total Expenditure

935.6

946.8

952.4

EBITDA

40.23

34.88

39.10

EBITDA %

4.12

3.55

3.94

Interest

5.06

2.87

2.2

PBDT

35.17

32.01

36.90

Depreciation

12.57

11.81

11.4

Other Income

1.27

2.87

2.1

PBT & Excep Items

23.87

23.07

27.6

Excep Items

0.00

0.00

0.00

Tax

7.9

8.62

9.16

Net Profit

15.97

14.45

18.44

Net Profit %

1.64

1.47

1.86

Equity

11.57

11.57

11.57

Reserves

190.63

191.54

204.52

EPS

13.80

12.49

15.94

ROE %

7.90

7.11

8.53

(Rs in Cr Except EPS)

Valuation & Recommendation

Precision wire is a stable growth company & has been impacted since last two years since
industrial and investment climate has been slow and hence expansion has not been initiated.
They are 100% market leaders in their segment. Further they are producing higher end cables
(more value addition) in the last few years.
PWIL is getting geared for the next level and is well equipped to deal with competition due to
low debt gearing and wide experience in the domain
Precision wires are definitely ahead of the curve since all profits are reinvested in the company.
They are not diversifying into real estate etc like most other companies facing slow down they
are focused on creating better value within their business
PWIL is expected to benefit of its proven track record and experience of the promoters, dominant
position of the company in the copper winding wires industry, comfortable financial leverage
and favorable capital structure, the companys ability to insulate itself from volatility in copper
prices, comfortable liquidity position with short working capital cycle, strong client base and
favorable future prospects for the power distribution and transmission sectors in the long term.

We Recommend Buy since PWIL in the largest manufacturer & market

leader of Copper Winding Wires in India, strong balance sheet, healthy D/E
0.24x and Cash ~23 per share

We expect for FY15E Net sales at ~ 991Cr and PAT of Rs ~ 18.4 Cr

respectively.
The stock currently has book value of Rs 175 FY14 & trading at P/BV ~0.66x
&P/E 9.3x
The BV of FY15E ~ Rs 186 & stock in trading at P/BV 0.62x

The stock has a potential upside to Rs 160 levels ~ 38 % upside with a 1.5 year
horizon
(Note: Illiquid stock accumulate in small quantity)

Technical View

STOCK HAS SEEN STEADY UP MOVE FROM 100-115 LEVELS

STOCK HAS
AS STRONG SUPPORT AROUND 100 -105 LEVELS.
WE ADVICE INVESTORS TO ACCUMULA
ACCUMULATE
TE STOCK IN THE RANGE OF 110-120
WE EXPECT STOCK TO TEST LEVELS OF 160 IN 12 -18
18 MONTHS
SUPPORT I : 105
SUPPORT II : 95
RESISTANCE I :136 RESISTANCE II : 160

Disclaimer
This information is purely intended to give insight into the operations & potential of the
company to investors & investor fraternity & not intended to solicit any investment Investors are
requested to make their own judgment & take decisions of investing if any at their own
discretion. The analyst for this report certifies that all of the views expressed in this report
accurately reflect his or her personal views about the subject company oorr companies and its or
their securities, and no part of his or her compensation was, is or will be, directly or indirectly
related to specific recommendations or views expressed in this report.