Why Skipper Share Price is Rising

Welcome to today's edition of stocks made easy.

Regular readers of this column turn to us for ideas and investment insights.

In case you missed it:

• This Water Infra Stock Could be the Biggest Story of 2025
• 4 Nifty 200 Stocks Near 52-Week Lows
• Why HEG Share Price is Rising

In today's edition, we'll look at Skipper.

Now at the first glance, this may look like a small company given its smallcap status but it's one of the world's leading manufacturers of transmission & distribution (T&D) structures, including towers and poles, within its engineering products segment.

Additionally, Skipper holds a strong position in the polymer sector and is a trusted partner for executing critical infrastructure EPC projects.

It has a global market reach of over 40 countries.

In the past few trading sessions, the company's stock price has seen a sharp increase. In the past 5 days, Skipper share price is up more than 10% while it has gained 15% in the past 1 month.

Let's look at the reasons driving the stock price and whether this rally has more legs.

Why Skipper Share is Rising

Stock Rises in Anticipation of Institutional Investors Meet

The recent rally comes after Skipper informed exchanges that the company's officials will be interacting with institutional investors on 6 December 2024, i.e. tomorrow.

Now, this is not the sole reason behind Skipper's rise, but investors may perceive the interaction as a sign that the company is actively engaging with institutional investors, potentially leading to higher institutional ownership.

Institutional investments are often seen as a vote of confidence.

Given the company's solid position in the high growth power transmission space, investors may be expecting these interactions to highlight the company's growth strategy going forward, and guidance as well.

Promoter Buying

The other reason why Skipper share price is rising for the past few days is because promoters of the company are showing skin in the game.

Insider buying data from the BSE shows that promoters of the company were allotted shares on 3 December 2024.

These transactions could either be promoters buying shares from the open market or promoters getting the remainder of shares that they subscribed during the rights issue.

Either way, promoter holding going up signals a show of confidence.

Strong Order Book Drives Sentiment

Skipper recently posted its earnings for the second quarter of FY25 which also marked its best-ever second quarter in its history.

Skipper's revenue for the quarter came in at Rs 11.1 billion (bn), while its half-year revenue stood at Rs 22 bn. These figures reflect an impressive growth of 44% and 66%, respectively compared to the year ago period.

Net profit for the quarter shot up by 66% to reach Rs 329 million (m).

This improved performance was backed by a strong order book and healthy execution post elections.

The company is currently sitting on the highest order book in its history, which provides strong revenue visibility in the coming years.

During the quarter, it secured domestic contracts from Power Grid and others, contributing to a total inflow of Rs 16.6 bn.

For the first half, order inflows stood at Rs 24.3 bn and the total order book is at Rs 65.9 bn, which is around twice its FY24 sales.

The company has a bid pipeline of more than Rs 180 bn.

What Next?

Skipper is currently expanding its capacity in the T&D segment by 75,000 MT. This capex is on track to be completed by end of FY25.

Meanwhile, it has also diversified into new sectors including telecom, railway electrification, water EPC, and drip irrigation. These could provide addition revenue streams in the coming years.

Post earnings call, Skipper's management highlighted strong growth plans for the future. The company is targeting 25% CAGR over the next 2-3 years with a long-term goal of reaching Rs 100 bn in revenue by FY29.

In FY24, it had revenue of Rs 32.8 bn. In the past 5 years, the revenue has grown at a CAGR of 12% while net profit has grown at a much faster pace, a CAGR of 21%.

Financial Snapshot

Rs m, consolidated	FY20	FY21	FY22	FY23	FY24
Net Sales	13,905	15,815	17,071	19,803	32,820
Growth (%)	-26%	14%	8%	16%	66%
Operating Profit	1,417	1,493	1,724	1,988	3,290
OPM (%)	10%	9%	10%	10%	10%
Net Profit	413	214	251	356	817
Net Margin (%)	3%	1%	1%	2%	2%
ROE (%)	6.2	3.0	3.5	4.7	9.8
ROCE (%)	9.0	9.1	9.9	12.1	20.8
Dividend (Rs)	0.1	0.1	0.1	0.1	0.1
Debt to Equity (x)	0.7	0.6	0.8	0.6	0.6

Source: Equitymaster

As part of its strategy, the company aims to capitalise on the growing demand for transmission towers, especially in high-voltage direct current (HVDC) systems, which are critical for long-distance power transmission and the integration of renewable energy sources.

Here's what Richa Agrawal, lead smallcap analyst at Equitymaster, wrote about Skipper in her recent editorial:

• Skipper is the biggest supplier to PGCIL which is the domestic leader in power transmission.
  
  But there is a lot more to it.
  
  Its also the lowest cost producer of transmission towers and poles in the world. That's because of backward integration. It has its own its own structure rolling, manufacturing, tower load testing station and transmission line EPC.
  
  All this makes it a proxy play in your watchlist for power transmission growth.
  
  The addressable market in transmission towers and EPC for the company is Rs 3-4 tn as per the management.
  
  The company can execute high voltage power transmission and distribution projects where the competitive intensity is less and margins are better.

You can check out the entire article here: A Niche Smallcap Power Stock for Your Watchlist.

How Skipper Share Price has Performed Recently

In the past 5 days, Skipper share price has gained 10%.

In 2024 so far, Skipper is up 167%.

Skipper hit a 52-week high of Rs 644 today and a 52-week low of Rs 207 on 21 December 2023.

In the past 1 year, shares of the company have rallied 142%.

Here's a table comparing Skipper with its peers -

Comparative Analysis

Company	Skipper	Kirloskar Brothers	Kirloskar Oil	Praj Industries	Shriram Pistons
ROE (%)	9.8	21.8	17.8	24.1	25.6
ROCE (%)	20.8	28.7	14.9	32.9	29.9
Latest EPS (Rs)	9.8	49.7	36.2	16.3	106.1
TTM PE (x)	59.2	47.1	30.4	49.5	20.1
TTM Price to book (x)	6.8	10.1	5.5	11.4	4.4
Dividend yield (%)	0.0	0.3	0.6	0.7	0.5
Industry PE	60.1
Industry PB	7.4

Source: Equitymaster, Ace Equity

For a detailed analysis, check out Skipper's financial factsheet.

Happy Investing.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...