Easun Reyrolle: Sky is the Limit for this Company as it is turns around, worst is behind it, Buy before you miss the train!



Easun Reyrolle - My most favorite stock is giving an opportunity of decade to buy, a must have in the portfolio.

Why the time is now?

If you look at Easun’s financials, it is evident that it has taken the full brunt of the economic slowdown due to which power projects are at a virtual standstill. In the financial year 2014,  Easun has not only reported lower sales of Rs.125 crore, but the net loss has widened to 40 crore. However, the important point to note is that there is no problem with the company’s execution ability. It is just that the economic slowdown has meant that new orders are not coming in at the same furious pace that they were coming in earlier.

This company manufactures power ancillaries which are in demand when lot of new power projects come, and at this stage India is just emerging with the new power projects as the order inflows have started - the signal is through the movement of power based stocks like BHEL, KEC International and KEI Industries. The company that can benefit the most because of this turnaround is the Easun Reyrolle and it must be continued to hold till India reaches the peak of GDP growth which I believe is still a long long way to go as India is just about to start with the emerging cycle of the GDP, it is because at the peak of GDP growth the sector that grows with the highest pace is Power and through which the products that companies like Easun Reyrolle manufacturers gets maximum orders.

Easun Reyrolle in the last 3 years had made significant investment in the manufacturing and presence in International markets, the company is ready with the new age and high margin products related to power transmission and distribution and awaiting for the huge order flows, Easun already has an order book in excess of Rs.700 crore. It recently announced that it secured an order from Energex Ltd, an Australian power utility, for supply of secondary switchgear worth US$ 80 Million and this is just the beginning. If the company before the capex could achieve standalone turnover of around 300 crore 4 years back then imagine what will be the consolidate turnover after the heavy investment the company made in the recent years, the consolidation seems to be over and now is the time to perform.

Easun Reyrolle business is to manufacture switchgears, relays and other products used for power transmission and distribution. It has a well established track record going back nearly 30 years. The unique aspect of Easun is that not only does it have a strong presence in the Indian market, but it has also a dominant presence in the international markets in the form of subsidiaries in Singapore, Sharjah, Canada, Germany and Australia. This business model enables Easun to access the latest technology and get high margins from developed markets while maintaining a cost advantage over its competitors by producing in India.

Look at the last few days chart of price movement of this company, some smart investor(s) are gradually accumulating it as the delivery volumes are high when the stock goes higher and volumes are lower when the price is lower so it is the perfect time to accumulate the stock before these smart investors dry up the volume totally, already it is significant from the past few days that the shares are not easily available as the free float is drying up.