Elixir Securities Limited – Detailed Report

Pak Elektron Limited (PAEL) is a market leader in electrical equipment segment where it dominates in the market of transmission machinery such as transformers, switchgears, and energy meters and is gaining traction in EPC contracts. Furthermore, the company is also benefiting from its presence in growing white goods segments (second largest market share in refrigerators segment) accounting for nearly half of its top line.

Elixir Securities Limited believes PAEL is in a sweet spot with strong presence in growing segments namely 1) Power transmission and 2) consumer electronics where heavy potential investment from GoP in energy sector and expected macro tailwinds would support overall revenues for the company. Elixir Securities Limited thus expects the company’s bottom line to grow at a 5 year CAGR of 21%. PAEL is currently trading at a cheap forward multiple of 6.6x/5.6x for CY16/17 (Post right), Elixir Securities Limited’s DCF based Dec-16 PT of PKR 83/share (adjusted for rights) offers a significant upside of 37% from its post right value of PKR 61.1/share (from LDCP of 66.4). BUY!