Why Skipper Share Price is Rising

India's recent emphasis on infrastructure development marks a significant trend with profound implications. The 2024 Interim Budget underscored this focus by allocating a historic budget of Rs 11.11 trillion (tn) (3.4% of GDP) to infrastructure projects.

Key announcements across various sectors further highlighted the government's commitment to this endeavor.

Prior to the announcement, shares of infrastructure companies were on the radar of investors. Post the announcement, the rally further intensified.

One such company that saw its shares rise was Skipper. The stock is up 27% in the last five days and 37% in the last one month.

What's pushing the stock higher? Let's find out.

Robust Quarterly Results

Shares of Skipper rose in the last five days after the company announced its results for the December 2023 quarter.

The company registered its best quarterly revenue at Rs 8 bn with a growth of 80.2% YoY on the back of its engineering segment.

The segment wise revenue for the quarter is as follows -

The engineering segment saw its revenue increase by 53.6% YoY to Rs 5.2 bn while the polymer segment's revenue increased by 10.9% YoY to Rs 1.1 bn. The infra segment's revenue jumped by 16x to Rs 1.7 bn.

Due to the increase in revenue, the company saw a 70.1% YoY increase in operating profit at Rs 771 m. Operating profit margins decreased marginally to 9.6% as raw material, employee and other expenses increased.

Overall, the company saw its net profit double at Rs 205 m. Net profit margins increased marginally to 2.6%.

For the first nine months of the financial year 2024, the company's revenue rose 60.9% YoY to Rs 21.2 bn.

The segment wise revenue for the period is as follows -

Consequently, the operating profit of the company came in at Rs 2.1 bn, higher by 74.4% YoY. Operating profit margins also went marginally to 9.9%.

The company's net profit jumped 3.7x to Rs 565 m, with net profit margins up by 1.7% YoY to 2.7%.

The company has secured new orders more than Rs 31 bn during the year. The current order book stands at Rs 57.8 bn with a composition of 82% from the domestic market and 18% from exports.

During the quarter, the company secured significant size transmission tower export contracts from Middle East Asia and several other T&D projects both domestic and international including telecom. The region holds tremendous power T&D opportunity.

The management also announced the successful closure of fund-raising through right issue, which was oversubscribed 1.77 times. It expects to achieve a 25% CAGR growth over the next three years.

Strong Business Outlook

Over the last few months, the stock has seen an upward trend on account of a strong business outlook.

As India's largest and world's only integrated transmission and distribution (T&D) firm, the company stands to benefit from domestic and international market opportunity in power, telecom, and railway sector.

It has reported its best-ever result in terms of order inflow in FY24.

Backed by a robust bidding pipeline (over Rs 90 bn) and strong order book (Rs 52 bn at the end of 9MFY24, to be executed between 15 months to 2 years) against a trailing 12-month revenue of Rs 24 bn, the management expects a growth rate of 25% CAGR over 3 years.

Together, railway and telecom contribute to 40% share in the orderbook offering a good diversification in the orderbook beyond T&D.

The focus on renewable energy and China plus one trend are further tailwinds in the Engineering division, while focus on water infra projects is a positive for Polymer business.

While the execution of the orderbook entails short term debt, the company has shown improvement in finance cost as a percentage of sales metric. And the proceeds from rights issue would further help it in meeting the working capital requirements.

The bid pipeline is stronger in international markets and a rise in share of exports will be better for company's margins. Further, an already high orderbook allows the company to be selective in bidding for orders with better margins.

How Skipper Share Price has Performed Recently

In the past month, shares of the company have gained over 35%. The stock has gained 75% in the past six months and around 260% in the year gone by.

The stock touched its 52-week high of Rs 362.5 on 19 February 2024 and a 52-week low of Rs 85.29 on 28 March 2023.

At the current price, the company trades at a price to earnings multiple of 54x and price to book value multiple of 4.1x.

About Skipper

Skipper is engaged in the manufacturing and selling of Transmission & Distribution (T&D) structures and pipes & fittings. It also undertakes EPC projects in the infrastructure segment.

The company is the market leader in the manufacture of T&D structures and distribution poles. It is positioned among the 10 largest global T&D structure manufacturers. It is India's largest and world's only Integrated T&D company having its own structure rolling, manufacturing, tower load testing station & transmission line EPC.

It has a pan India presence and exports its product to several international geographies which include Africa, Australia, Middle East, South & South-east Asia, South America, and Europe.

For more details, see the Skipper company fact sheet and quarterly results.

For a sector overview, read our engineering sector report.

You can compare Skipper with its peers:

Skipper vs Azad Engineering

Skipper vs KPI Green Energy

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