Galada Power & Telecommunication – Stocks To Watch

Galada Power & Telecommunication

BSE Code : 504697)

Promoted by Galada family, GPTL is engaged in manufacture of Aluminium Conductors for Power sector. Company has installed capacity of 12,000 tonnes p.a. For last few years, company has not been performing well and incurring heavy losses. GPTL reached such state of affairs due to many factors including erstwhile slowdown in user industry, non-receipt of large payments from a State Electricity Board, backward integration which did not take off but blocking large capital and also mismanagement. Now, scrip is being recommended as company good potential to turnaround once OTS takes place and current market cap of GPTL is just Rs 11 crores.

Financial performance of GPTL is below average and current turnover is very low due to the fact that company dont have working capital for running the plant at full capacity. Since, company do not have networth to give bank guarantee to bid for tenders, GPTL is doing job-work/conversion for others (who are procuring orders from SEBs). Hence, its plant is operating at much lower capacity compared to the installed capacity and profit margins in conversion work are negligible. GPTL has carry forward losses amounting to Rs 152 crores.

We are unable to provide future estimates about its sales/ profits due to the fact that OTS terms are still not finalised. However, considering that its market cap is just 11 cr and company has surplus land worth 25 cr, rod making plant lying in customs and 12000 tonnes p a conductor manufacturing capacity, investment in GPTL at current levels is almost riskfree. Scrip can give multibagger appreciation after OTS and resumption full-fledged operations. Investors with medium to long term perspective may buy big quantity. A very low-risk investment opportunity with bright chances of multibagger appreciation.

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