Best Long Term Buy - Webel SL Energy

Webel SL Energy is a pioneer and leading producer in Solar Photovoltaic Cells and modules using mono-crystalline Silicon Wafers. Webel SL Energy is jointly promoted by SL Industries, West Bengal Electronics Industries Development Corporation and Helios Tech of Italy.
Webel SL Energy has presently a paid up capital of 7.74 crores. The promoters SL Industries also picked up 107000 shares as conversion from warrants at 350 per share in February 2008. While MFs hold about 5%, FIIs and FCBs hold nearly 26% in the company.

In October 2007, Merrill Lynch had picked up FCCBs worth $16.8 million in the company paying a premium of Rs.540 per share!!
The money collected through these and GDRs issued last year is to be utilised to raise the capacity from the current 10MW to 42MW per annum.
Webel SL is also forming a JV with Micro Power of Singapore for sourcing of silicon ingots and setting up a slicing plant for the manufacture of silicon wafers, the main ingredient for Solar Cells.
Silicon costs are zooming putting pressure on margins, however, with this jv becoming operational, costs would reduce by half.

Webel exports almost 95% of its production to countries like US, Germany and Japan. Rupee Volatility is non issue due to companies natural hedge in form of imports of raw material fo silicon.
While Wind Energy margins are about 0.6%, the same for Solar Energy is as attractively high as 10%.
With High Crude prices, kyoto protocal, Govt. Subsidies, the demand for Solar Energy can only go up.

"What the World consumes in 1 year of Solar Energy can be produced by just 1 hour of Solar heat"
Webel is targeting 100MW by April 2010 from its existing 10MW capacity. This is being done by settinp up of an SEZ zone of Falta, Kolkatta.

One brokerage had a forecast of EPS of 24 for FY09 and an EPS of 50 for FY10. Even if we take a conservative EPS of 30 for FY10, a PE of 15 will give the stock a price of 450, which is double from what it quoting now.
This is one stock which is capable of repeating the sucess of Bharti Airtel, Pantaloon and Suzlon for those who stay invested for a minimum of 3 years.
BESt of luck ,
Regards,
Srikanth
Also visit goodfundadvisor dot blogspot dot com