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ICICI Securities is optimistic about Skipper and has given the stock a “Buy” rating with a target price of ₹635, as mentioned in its report on October 14, 2024.
Skipper: A Low-Cost Leader in Transmission Towers
Skipper is India’s largest manufacturer of transmission towers, with a capacity of 300,000 metric tons per year, making it one of the top 10 globally. The company holds around 15% of the market share in high-voltage transmission towers and sources 90% of its raw materials in-house, which helps lower costs and boost profit margins.
India’s Power Transmission Sector is Growing
The Central Electricity Authority (CEA) has estimated a spending requirement of ₹4.75 trillion for the power transmission and distribution (T&D) sector by 2027. This will include adding over 123,000 kilometers of transmission lines and increasing transformation capacity. Skipper, being a major player in this industry, is set to benefit from this growth.
Expanding Exports to the US and Europe
Skipper already exports to over 60 countries, and exports make up 28% of its engineering products revenue and 19% of its total revenue. The company plans to expand further into the US and Europe, aiming to increase export contributions to 25% of total revenue in the long term.
Polymer Pipes Business on the Rise
Skipper’s polymer pipes business grew by 30% in volume during FY24. This was driven by expanding into new regions, introducing new products like bathware and water tanks, and promoting the brand with celebrity endorsements from MS Dhoni and Chris Gayle. Skipper plans to further expand into Western and Southern India, which should fuel more growth in the coming years.
ICICI Securities Recommends Buying Skipper
With a strong order book of ₹58.8 billion (1.8 times FY24 revenue) and expected revenue and profit growth of 25% and 56%, respectively, from FY24 to FY27, ICICI Securities has initiated coverage on Skipper with a “Buy” rating and a target price of ₹635. The company’s strong position in the T&D sector, growing exports, and expanding polymer pipes business make it a solid investment choice.
Disclaimer: The views and investment tips expressed by investment experts on Sharepriceindia.com are their own and not those of the website or its management. Sharepriceindia.com advises users to check with certified experts before taking any investment decisions.
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