Broker’s call: Salzer Electronics (Buy)

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Target: ₹1,021.50

CMP: ₹901.80

Started from a single product company in 1985, Salzer Electronics now offers a diverse range of products. It operates across Industrial switchgear, wires & cables, building management and energy management divisions through its 6 manufacturing facilities in Tamil Nadu.

Salzer’s revenue mix for FY24 between Industrial Switchgear/Wires & Cables/Building Products stood at 54.7/39.5/5.9 per cent. Over the years, the share of Industrial switchgear has increased steadily from 44.8 per cent in FY20 to 54.7 per cent in FY24 and we expect it to grow at a healthy pace over the next few years on the back of increasing demand for safe and reliable systems coupled with rise in demand for HVDC systems.

Expansion of high tension-transmission network to cater to the growing energy demand across the manufacturing and industrial sector is expected to further stimulate demand for the company’s products. Wires & Cables also continues to grow at a healthy clip.

With the unique proposition of customised solutions for its clients and with long term partnerships with marquee customers like L&T, GE, Schneider, Indian Railways, etc., we believe that Salzer is well placed to capitalise on the rising demand for its products with increasing spends on infrastructure, engineering and power distribution. The company has delivered an impressive revenue CAGR of 16.9 per cent over the past decade. Margins are expected to improve from hereon.