Multibagger power stock gains 4% as Nuvama assigns buy call

Shares of Skipper Ltd gained after Nuvama Institutional Equities initiated coverage on the stock with a 'Buy' call. It assigned a price target of Rs 650 per share, a 46.39% upside to the previous close of Rs 444 for the multibagger stock. Skipper stock climbed 4.2% to Rs 462.70 in early deals on BSE. Total 4153 shares changed hands amounting to a turnover of Rs 18.75 crore on BSE. Market cap of the firm rose to Rs 5,084 crore. The stock fell to a 52-week low of Rs 197.35 on October 25, 2023 and hit a 52 week high of Rs 507 on September 27, 2024.  

The stock has gained 98.41% in 2024 and risen 110% in a year. It climbed 532% in two years and zoomed 450% in three years. 

In terms of technicals, the relative strength index (RSI) of Skipper stands at 49.4, signaling it's trading neither in the overbought nor in the oversold territory. The stock has a beta of 1.6, indicating very high volatility in a year. 

Skipper shares are trading higher than the 20 day, 30 day, 50 day, 100 day, 200 day but ower than the 5 day and 10 day moving averages. 

"Skipper is ready to harness several tailwinds: i) power T&D capex of INR9.2tn over 2022–32; ii) improving product mix with a shift to margin-accretive HV segment; iii) doubling of capacity in four–five years; iv) a well-capitalised balance sheet with FY24 D/E at 0.49x (exhibit 32); and v) operating profit margins improving from 9.7% in FY24 to 10.5% by FY27E (guidance of 11% for three years). Valuing Skipper at 25x FY27E EPS of Rs 26 yields a target price of Rs 650. Our bull case target price of Rs 740 factors in 11% margin by FY27E with a 30% OI CAGR and a similar target multiple vis-a-vis the base case. Key Risks: Execution and order award delays, sharp price movement of raw material (50% unhedged T&D OB) and WC management," said Nuvama. 

Axis Securities also has a buy call on the stock with a price target of Rs 600 per share. 

Axis Securities said, "As India's largest and the world's only integrated Transmission & Distribution (T&D) player, Skipper is uniquely positioned to capitalize on the rising demand in the sector."

"The brokerage currently has 10%-15% market share in high-voltage transmission lines. Skipper is also a leading brand in the polymer sector in India (pipes and fittings) with a capacity of 62,000 MTPA. It also manufactures telecom towers and railway structures. The company operates through three segments - Engineering (68% of FY24 Revenue), Infrastructure (18%) and Polymer (14%). National Electricity Plan (NEP) has projected a total Capex of Rs 4.75 trillion crore during the period 2022-27 for laying out an additional transmission system (of 220 kV+) in the country to meet the rising power demand as well as to evacuate power from the growing RE capacity. Skipper is well-positioned to cater to this growing T&D investment. To cater to the soaring T&D infrastructure demand, Skipper targets to double its capacity from the current 3 lakh tonnes to 6 lakh tonnes over the next 4-5 years with a total capex of Rs 800 cr," said the brokerage. 

Skipper Limited is one of the leading companies in the power transmission & distribution and the polymer segment. Skipper differentiates its offerings with high quality but cost-effective solution for infrastructure providers and telecom operators. Its international footprint spans across continents such as Latin America, Europe, and Africa and is spread across 40 plus countries with presence across sub-segments such as Power Transmission & Telecom Towers and Poles , EPC, Monopoles, and Railway Electrification Structures.