Tuesday, August 31, 2010

HBL Power System Ltd...cmp Rs.26.15...excellent pick....

I am writing today on HBL Power System Ltd.

On HBL Power System Ltd:

HBL Power Systems Ltd., has more than 30 years of experience in the field of specialized Batteries and DC Power Systems. The company is the result of a merger between Hyderabad Batteries Limited (1977) and SABNIFE Power Systems Ltd (1986). The company has its Head Quarters in Hyderabad, India with factories and Sales Offices in various parts of the country. HBL also has Offices / Distributors / Agents all over the Globe to cater to its ever-growing Export Business.

HBL is committed to improving global competitiveness by sharing knowledge, drive for innovation & growth, and investments in internationally benchmarked technology & niche products.
HBL & HBL Rail

HBL Power Systems Limited is the established market leader in India for batteries & standby power solutions in Railways, Defence, Industry & Telecom market segments.

HBL has diversified into electronics with an objective of providing end to end solutions in niche market segments. To meet the mass production demands and high levels of quality, HBL has set up a state-of-the-art electronics manufacturing unit for assembly of all types of components and is equipped with automated, semi-automated assembly and test facilities. To ensure quick and high quality service, HBL has set up a service network spanning the entire country.

HBL Rail is a division of HBL that develops products & solutions for the Railways, with focus on Interlocking and Collision Prevention applications. Having gathered adequate domain knowledge and product / service skills, HBL Rail has established internally necessary processes to be a long term player in the Railway segment.

Now I am pasting contents from one of my friends site which he gave a call in Feb 2009 at Rs 110 and 10 paidup.........

A. Batteries: This is the core business of company deriving more than 90% of total revenue. HBL is a technology focused manufacturer of several ranges of specialized application batteries i.e. nickel cadmium (pocket, fibre, and sintered plate), lead acid (VRLA, Tubular, LMLA), silver oxide zinc, lithium, thermal, etc. Infact it is the market leader in VRLA (valve regulated lead acid) and NCPP (nickel cadium pocket plate) batteries and enjoys 50% market share of domestic telecom market. Ironically, HBL is the world’s second largest player in nickel cadium alkaline batteries and stands 3rd for Nicad Passenger aircraft batteries. Moreover it is among the very few companies in the world making ultra high specialties batteries for military use like thermal, reserve and torpedo batteries. It also produces passenger and military aircraft batteries which are mainly for export.

Meanwhile, company has completed the development and test marketing of pure lead tin (PLT) Batteries for diesel engine starting (gensets, trucks etc) and has even entered into agreements with a reputed company for sale under their label. This marks the entry of HBL into the gigantic automotive industry. It is also working with makers of EKO battery operated electrical vehicles to design & manufacture advanced technology batteries for these future products. To encourage use of green, non-polluting power fast growth is expected in the solar power and as each equipment based on solar power needs batteries to store and supply the power, the potential in this area is very substantial.

B. Railway Electronics: Traditionally HBL has been supplying various batteries for train lighting, air conditioned coaches, locomotives, signaling and communications. But off late, company has designed and developed wide range of microprocessor based signaling products and power systems to cater to the needs of Indian Railways. It now offers integrated power supplies for railway stations and does turnkey signaling works contracts including design, installation and commissioning. It even has a dedicated division to execute end-to-end turnkey railway signaling works, starting from yard design, estimation, procurement, installation and commissioning. Company is now also working closely with IRISET, RDSO and other agencies to showcase and implement its other innovative electronics products like data loggers, automatic train charting systems, high frequency track circuits, solid state interlocks, digital axle counters, etc. In short this segment is expected to be the major growth driver in coming years, since the railways have embarked upon the modernization programmes of signaling systems all over the country in a phased manner.

C. Defence Electronics: Although HBL derives hardly 5% revenue from this division but it boasts of supplying several specialized, tailor made batteries to the Army, Navy and the Air Force. Last year it supplied battle tank batteries to three NATO countries. Infact it is most dependable supplier to defence for critical application areas like torpedoes, missiles, aircraft starting, ground power units etc. where no other manufacturers can cater. Besides, company also deals in several electronic products which are used in defense sector like electronic warfare, radar, field telephone exchanges, electronic proximity, time fuzes, radio relays, laser weapon sights, night vision devices, opto electronics, thermal imagers, simulators, mine and grenade electronics etc. Unlike batteries and railway products where almost all development was done in house, HBL has collaborated with IAI - ELTA of Israel for most of the defence electronics products. Their joint venture has already bid for two defense contracts for electronics worth Rs 500 cr. The tender is expected to be opened and finalized during the current fiscal.

My Comments:
I like this stock even though it is 1 paid up becuase at Rs 26 , if we take it as 10 paidup, it is still 260 and I feel that HBL needs to have better discounting then rs 26 as the last year eps is 4 and even if we put an 10 p/e ratio it should be 40....but the demand I am seeing from Railways , Defence and Aviation sector I feel HBLPower System Ltd is grossly undervalued.
Citi gr took the stake in this excellent Co at Rs 340 when it was still 10 paidup, means at rs 34 , 1 paidup.....
Looking at the future growth I would recomend to buy this stock for LT .......
The Mcap is 701 and sales is 1109 so, here the Mcap and sales ratio also favours this Co.
What more I like about this Co is Promoters holds 70% and 15% is held by FII's and DII's....

DD is a must before taking a plunge in it.


  1. Hi Rajeev
    Whats the actual business of Beckons Industries? I could not understand it. Also any view on Tanla Solutions and Allcargo Global Logistics.

  2. Minar,
    Beckons Ind is now in Bio Fuels sector making Biofuels from Algae plants.It is a novel method ans Co boast that they have made major break through in it.
    Needs to be seen how much it gets successful.There is a story in it but needs to be fruictify.
    Allcargo, I gave a call already.I do not tracl Tanla but I like Tulip....and after splitup in 2 paidup, I like it more....

  3. Rajeev, are you tracking Kirloskar Electric? Just wants to know your views about it, I searched this blog but could not find anything about it.

  4. Dear RD,some great names.....yes..
    at navneet publications GALA also a SSC,under his management in 1994 ten rs paid up with a rs 50 priemium,100 shares as on date he gave dividend more than rs 28000,along bonus&rights comes near about 3480 shares now @ rs 60.now one can enter in this scrip in e edn era.....

  5. mitul,
    Kir Elec is excellent pick for LT but HBL ans Kir are both in dif cateegory...

  6. dear sir

    what is your valuable view on REI AGRO?
    it has beaten down a lot from the highs?
    is it worth long term investment at cmp?

    kindly advice.

    thanks in advance

  7. sokhi,
    I do not track REI Agro so no view....

  8. Hi Guys,
    posting below the link and list of Indian companies listed in Forbes 200 best Asian companies below $1 Billion

    Who so ever is interested can go through it.


    List of Indian Companies amongst them

    Allied Digital Services
    Amara Raja Batteries
    Ashiana Housing
    Bliss GVS Pharma
    Compact Disc
    Core Projects
    Deep Industries
    Dhanuka Agritech
    ELGI Equip
    GSS America Infotech
    Hyderabad Industries
    Indag Rubber
    Jindal Drilling
    Kaveri Seed
    KNR Constructions
    Liberty Phosphate
    Micro Tech
    Navin Fluorine
    Nitin Fire Protection
    Ponni sugars
    Ranklin solutions
    Sandur Manganese
    Solar Industries
    Spice Mobility
    Transformers & Rectifiers India
    Ushdev Technologies
    Vinati Organics
    Zydus Wellness

    With Regards,

  9. Dear Rajeevbhai ,

    I saw on MMB that you have discussed one stock, Indo-Bonito Multinational Ltd. but have not put on your blog. Company has a meagre market cap compared to it's revenues. But I could not get exactly the nature of it's business. Can you please enlighten on the scrip if its worth taking an entry into it ?


  10. There is another excellent fundamental stocks blog

  11. mech,
    see the link....I gave a call in Apr 2009!


  12. Hi Rajeev,

    HBL is been acquired by TATA group.

    So, will each share holder of HBL get all shares of TATA group?

  13. ramki,
    Tata has taken stake of HBL subsidiary and not whole HBL Power System.
    So there is no way one will get shares of Tata Cos.

  14. Respected Sir,
    I am hanging in remi metals gujarat i have 500shares since last 3yrs at 25rs .... please guide me .... what is the future of company please give your advice.
    Raja surat