COMPANY OVERVIEW:
Precision Wire India was established in the year 1989 to manufacture Enamelled Copper Winding wires.
Company has current installed capacity of 25000 metric tons/ annum, it is further being increased. It has three manufacturing facilities located at Silvassa, Dadar Nagar Haveli and Palej.

PWIL wires are widely used in the following equipments:
Rotating Machine
Alternators
Hermetic motors
Power and distribution transformer
Control and power supply transformer
Ballast
Auto electrical
Household appliances
Fans
Switchgears

PRODUCT	SALES(In crore)	% of Total
Enamelled Copper Winding Wires	Rs 539.52 crores	85.8%
Other Raw Materials	Rs 49.55 crores	7.88%
Waste and scraps	Rs 36.7 crores	5.83%
Enamel	Rs 1.56 crores	0.24%
Wire Enamel	Rs 0.79 crores	0.12%
Other miscellaneous	Rs 0.53 crores	0.08%
Other sales	Rs 0.09 crores	0.01%
Bare copper wires	Rs 0.04 crores	0

INVESTMENT RATIONAL:
As the requirement for power generating equipments is increasing, company is expected to benefit from it.
Company has gone through the worst phase in FY09 and incurred losses in the last quarter of FY09. This was mainly due to the fluctuation in the prices of copper in the market. We expect the prices to stabilize and the worst is over for the company.
Company fortune is linked to the consumer durable and industrial equipment sector, as these sectors are doing well it will have positive impact on the company`s profitability.

Company has added CTC (Continuously transposed Conductor) into its portfolio. This segment is highly capital intensive and requires much trained work force. The demand for CTC is rising in the domestic and international market. We expect company to benefit significantly because of its first movers advantage.
Company debt equity ratio is very low at 0.4. This will help company in getting additional debt at the time of expansion.
Company also has agreement with Invex SPA of Italy, which is complementing existing portfolio by manufacturing high end wires used in power transformers.

RISK:
High volatility in the price of key raw material copper could be dent on the company`s profitability.
Any slowdown in the economy will be bad for the company`s fortune.
Industry is very much fragmented this is adding to the intense competition.

	NO.OF SHARES	% OF TOTAL
PROMOTERS	6897283	59.65%
INSTITUTION	291843	2.52%
GENARAL PUBLIC	4374497	37.83%
GRAND TOTAL	11563623	100%

	31/03/06	31/03/07	31/03/08	31/03/09
TOTAL INCOME	340.06	586.31	574.97	536.94
EXPENDITURE	-306.92	-547.82	-534.86	-520.57
PBDITA	33.14	38.49	40.11	16.37
DEPRECIATION	-4.64	-7.51	-9	-10.32
PBIT	28.5	30.98	31.11	6.05
INTEREST	-1.51	-5.26	-4.63	-3.98
PBT	26.99	25.72	26.48	2.07
TAX	-8.19	-9.23	-9.23	-0.9
PAT	18.8	16.49	17.25	1.17

Key Highlights:
Total Income grew at rate of 16% over the last four years.
PBDITA grew till FY08 at 10% but suddenly in FY09 it fell from Rs 40 crore to Rs16 crore. The reason for the sudden fall is the erratic movement in the price of copper.
Net Profit remained almost flat till FY08 at Rs 17.25 crore but it fell to Rs 1.17 crore in FY09 due to volatile raw material price, higher depreciation.

	31/03/06	31/03/07	31/03/08	31/03/09
EPS	16.34783	14.33913	15	1.017391
PBDITA MARGIN	9.745339	6.564787	6.976016	3.048758
NPM	5.528436	2.812505	3.000157	0.217901
INTEREST COVER	18.87417	5.889734	6.719222	1.520101

Key Highlights:
EPS remained flat at Rs 15 till FY08 but suddenly fell to Rs 1.01 in FY09 due to volatile raw material price.
PBDITA margin was at 6.9% in FY08 and it fell to 3% in FY09. This is attributed to increase in input cost.
NPM declined from 3% in FY08 to 0.2% in FY09 due to higher input cost and higher depreciation.
Interest cover declined to 1.5 in FY09. The decline was due to lower PBIT, interest outgo remained same.

	Q1FY2009	%CHANGE	Q1FY2010
TOTAL INCOME	161.09	-21.40%	126.63
EXPENDITURE	-147.53		-113.71
PBDITA	13.56	-4.70%	12.92
DEPRECIATION	-2.52		-2.64
PBIT	11.04		10.28
INTEREST	-0.95		-0.98
PBT	10.09		9.3
TAX	-3.34		-3.22
PAT	6.75	-9.90%	6.08

Key Highlights:
Total Income dropped by 21.4%.
PBDITA declined by 4.7.
PAT declined by 9.9%.
We expect company’s worst is over and the decline in profitability has bottomed out at this level. Company is now again in a position to get back to its original position.

VALUATION AND OUTLOOK:
At CMP of Rs 65 PWIL is trading at 4.5X to its FY10E EPS. We value the company at 7X, looking at the historical PE commanded by the company. The fair value comes at Rs 105. So a good appreciation in the share price could be seen.
Outlook of the company is good looking at the pace of growth in the Indian economy. The thrust on the power sector by the government will benefit the company in medium term. Higher disposable income will allow the Indian consumer to buy more consumers durable item, which will also benefit the company fortune.

CONCLUSION:
Investors with 6 to 8 months investment horizon should take exposure on the counter. The risk reward ratio is favorable.