Veto Switchgears and Cables Ltd

Veto is a company engaged in the manufacturing of wires and cables, Electrical accessories and all types of LED lighting’s, CFL’s and Fan’s. The company has manufacturing facilities in Haridwar and Varanasi. Products are made using Advanced technology, resulting in being the leading supplier of electrical goods in Gulf Countries.

The company has two brands Veto and Vimal. The products are sold under these brands by a large network of distributors and dealers throughout the country. The company also supplies electrical goods in the Gulf. There has been a major success in some of the biggest cities of the UAE. LED floodlights and slim panel lights were launched in the CY 17 as “Vyoma”.

Wires and cables play a major role in today’s digitally enriched lives and finds usage across a number of applications in several other Industries as well. Veto Switchgears is well positioned to take advantage of this booming digital age. The company derives 40% of its revenues from Wires and Cables business having a stronghold in Rajasthan and Gujarat where it competes with the likes of Havells and Finolex.

New focus is to expand its reach across various states like Maharashtra, Punjab, M.P, Haryana, U.P, Jharkhand, Kerala and Assam by  expanding its distributors across these states. Launching retail outlets are also a step taken by the company.

Lighting and Fittings is where the major action is happening. Growth is being aided by various government initiatives. This segment saw a growth in revenues of 42% in the previous 9M ended Dec-17. The company has been reducing Debt and has been delivering a good consistent profit growth.

I expect the company to grow at a rate of 11.75 percent based on its reinvestment and efficiency ratios which i think are to be sustainable. The company will be able to sustain its current profit margins and i expect the company to clock EPS of Rs. 11.19 FY-19. Giving it a median PE of 25 the stock could go up to 280 an upside potential of 44%

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