Monday, March 26, 2012
Schneider Electric Infrastructure , an associate company of the French Energy management conglomerate Schneider Electric is a newly listed stock in our stock exchanges.This company originated by the Areva T&D’s global take over by the Alstom-Schneider consortium and subsequent de -merger of Transmission business to Alstom and distribution business to Schneider.The global takeover happened in 2010 at a cost of EUR 2.29 billion.Later the high voltage business allotted to Alstom and Medium and low voltage business allotted to Schneider to align with their global status.The Indian business of erstwhile Areva T&D also shared in the same manner here.In the initial stage its name was SMARTGRID AUTOMATION DISTRIBUTION AND SWITCHGEAR LIMITED and changed its to Schneider Electric Infrastructure Limited in December 2011. Its ultimate parent company Schneider Electric is one of the world's largest manufacturers of equipment for electrical power distribution, industrial control and automation.Its nearest rival is ABB , but if we take the growth in Asia region business Schneider outpaces with a 21%sales growth compared to 5% of ABB. Even in other parameters too Schneider showing better prospects as in the case of operational margins for low voltage business where its is 20.5 % for Schneider and 16% for ABB (Asian business) .At present Schneider’s revenue share from Asian region is about 37% and it is growing very fast mainly due to some aggressive acquisitions made in last few years. In India , parent company made some big ticket acquisitions in recent past which includes Conzerv Systems, Meher Capacitors, Zicom's electronic security systems integration business(Rs.225 Cr),Uniflair India, APW President Systems( Rs.70 Cr approx.),Digilink(Rs.500 Cr) and Luminous ( Rs.1400 Cr)..etc.These figures clearly indicates their commitments to India . Coming back to the business of the listed entity ,it is in MV/LV Distribution business which includes Protection relays , control panels and other accessories.Even if there is some slowness in power generation and distribution policies by government in recent times , we all know there is huge scope remaining and it is inevitable in a country like India.I believe , with superior technology ,aggressive marketing strategies and vast experience Schneider having big opportunity in India for their Distribution business going forward.For the nine month ended December 2011 Schneider Electric Infrastructure posted a turnover of Rs.1054 Cr and a net profit of Rs.33Cr .In the latest December quarter alone it posted a sales of Rs.409 Cr and a net profit of Rs.18 Cr .Margins are not great at present but it is expecting to improve after the full control of Schneider in the management .SEIL listed last week and this FV Rs.2 stock is currently trading around Rs.70/- .I feels the major selling happening in these days are from some Institutional share holders. As a matter of policy ,generally some funds/institutions are not interested to hold de-merged pieces and this may be an offloading because of this reason. I strongly believe whenever this supply ends this stock will move to the next level and may turn as a dark horse in coming years.Risk takers may enter in it @CMP of Rs.69.60/- and hold for long term.With effect from, April 3, 2012 this will come out of ' T ' group and shifted to 'B' Group.
* Since it is a newly listed stock ,only limited information is available now
* Disc: I have vested interest in SEIL