delvery call-TRF - Growth in order book

TRF Ltd Face Value - Rs 10 Buy Rs 515
Ticker: 505854 Equity: Rs 5.50 crore H/L: 640/ 239
Tata Robinson Fraser (TRF), specialises in the manufacture of advanced systems for conveying, stacking, blending, reclaiming and processing of bulk raw materials. TRF also undertakes turnkey contracts for total bulk material handling plants. Operating margins of the company are expected to improve going forward, as TRF has changed its business policy. Now its clients buy steel for orders placed in favour of onsite fabrication. Earlier, TRF procured the material. This has resulted in the more predictable and improved operating margins. The completion of the low margin contracts has also helped the company in a major way to improve its margins. The impact of the policy can be seen from the fact that, its OPM has gone up to 8.11 per cent in 9MFY07 as compared to 6.91 per cent in 9MFY06. The current order book of the company is around Rs 450 crore which is almost 2x of its FY06 topline. TRF is also a part of a consortium including TATA Power which will set up an ultra mega power project (UMPP) plant at Mundra. The total investment for the 4000 MW plant is around 18000 crore and material handing equipments (MHE) share will be around 10 percent. TRF is targeting majority share in the MHE, which is a huge opportunity. On the financial front, the company has posted strong results for 9MFY07 with topline of Rs 205.59 crore and bottomline of Rs 10.15 crore, an increase of 49.8 per cent and 220 per cent respectively over 9MFY06. The performance is also expected to be good in FY08 on account of improved margins and growth in order book.