Skipper - Riding On The T&D Capex Wave; Axis Securities Initiates Coverage With A 'Buy' Rating

Axis Securities Report

We initiate coverage of Skipper Ltd. with a Buy recommendation and a target price of Rs 600/share, implying an upside potential of 44% from the current market price.

Skipper is India’s largest and the world’s only integrated transmission and distribution company present across the entire transmission chain. The company has its own structure rolling, manufacturing, tower load testing station, and transmission line EPC. Its capability to execute high-voltage power transmission projects gives it a distinct competitive edge over peers.

It 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 has projected a total capex of Rs 4.75 Tr 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 four-five years with a total capex of ~Rs 800 crore.

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