1
Please refer to important disclosures at the end of this report
1
1
Maharashtra Seamless (MSL) is a leading manufacturer of seamless and ERW
carbon & alloy steel pipes and tubes in India. Based on exploration activities in
hand, ONGC and OIL are expected to raise capex per year to `35,000cr for
FY18/FY19 compared to `25-30,000cr in FY14-17. Correspondingly, demand
for carbon/alloys (OCTG) seamless pipes used in drilling oil and gas is expected
to be closer to 8-9 lakh tpa compared to 6-7 lakh tpa during FY13- 16.During
FY17, the company reported a healthy performance on the back of anti-dumping
duty imposed by the Government of India (GoI), which aided volumes as well as
realisations. Further MSL’s capacity utilization has been between 40- 50% at 3.5
lakh tons capacity, the company should achieve volumes of 275K tons/335K tons
in FY18/FY19 respectively. During FY17, the seamless pipes volume registered a
healthy increase of ~40% YoY to 209746 tonnes while ERW volumes grew
~17% YoY to 72331 tonnes. The overall pipes sales volume grew ~33% YoY to
282077 tonnes. It has been maintaining a healthy dividend payout of 27.96%.
Further the cash flow of company has improved from `104.39cr in FY15 to
`328.54cr in FY17. MSL’s RoCE is 8.24% and is trading at valuation 12.06x
EV/EBITDA of FY17 earnings. Hence BUY.
BUY
CMP `444
52 Week High / Low
454.5/204.1
Avg. Daily Volume
16,737
Construction & Eng.
Market Cap (` cr)
2,978
5
BSE Sensex
31,663
Nifty
9,930
Face Value (`)
Reuters Code
MHSM.NS
MHS:IN
1.3
Vaibhav Agrawal
022 3935 7800 Ext: 6808
[email protected]gelbroking.com
Maharashtra Seamless Ltd
Others | Construction & Engineering
Sept 08, 2017
2
Maharashtra Seamless Ltd |Construction & Engineering
June 5, 2017
2
Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
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Disclosure of Interest Statement Maharashtra Seamless
1. Financial interest of research analyst or Angel or his Associate or his relative No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives No
3. Served as an officer, director or employee of the company covered under Research No
4. Broking relationship with company covered under Research No
Ratings (Based on expected returns Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
over 12 months investment period): Reduce (-5% to -15%) Sell (< -15)