>Easun Reyrolle- Initiating Coverage

Easun Reyrolle is an acknowledged leader in the field of electrical power management. The company offers a "ONE TOUCH ACCESS" to power system solutions. It has 25% market share in the relay panel (a power system protection device) market in the country. It has diversified its offering to protection products, protection systems, energy meters, automation, communication & control products, turnkey projects business, and switchgears. ERL expects to sustain the growth of 50% CAGR for next 4 years. Easun is one of the leading players in power management – power
system protection, control and automation, would benefit from the investments in the power sector,
especially transmission and distribution space.

Recent Developments : Easun, recently, has been awarded for the Overall Best Product Displayed at ELECTRAMA 2010 (largest exhibition for the Electrical Power Transmission and Distribution products and solutions in the entire Asia and is among the largest in the world in this category) for its Solid Insulated Switchgear- ISIS. ISIS, which has smallest size in the world, is free from toxic green house gas SF6. ISIS has attracted keen interest from domestic as well as global player over GIS.

Financials : Net profit of Easun Reyrolle rose 229.17% to Rs 0.79 crore in Q1FY11 as against Rs 0.24 crore YoY. Sales rose 11.57% to Rs 40.60 crore in the quarter ended June 2010 as against Rs 36.39 crore during the previous quarter ended June 2009. In year 2009 company bought back FCCB at 50% discount. As on March 2010 the Company is Debt free having more than INR 110 crore cash and bank balance in balance sheet with a net worth around Rs 250 crore.

Valuations: Easun Reyrolle CMP provides an attractive entry point to long term investors. The
stock has been valued on P/E multiple basis to arrive at a price target of 290. At CMP, stock trades at 6 X FY11E and 4 X FY12E earnings with an EPS of Rs. 19.38 and Rs. 29.08 respectively. The stock looks attractive from a medium – to- long-term perspective and hence
we recommend Accumulate the stock.

To read the full report: EASUN REYROLLE