Please refer to important disclosures at the end of this report
Ratnamani Metals & Tubes is engaged in the manufacturing of stainless steel
pipes and tubes and carbon steel pipes at Kutch, Indrad and Chhatral in the
state of Gujarat. The company has maintained its performance ever since
and its 5 years sales CAGR stands at 15.3% and PAT CAGR for the same
period is at 11.8%.
The beginning of FY20 was however not favourable for the company, but it
recovered in 3QFY20 by reporting a qoq sales growth of 23.9% and a yoy
sales growth of 3.8%. This was volume driven growth while realization
restricted the overall growth. EBITDA margin expanded by 23bps to 13.6% in
the same quarter. The management has further guided 15% revenue CAGR
for coming years. Going ahead, the company is expanding its Stainless Steel
and Carbon steel capacity by 20,000 tons and 2,00,000 tons capacity,
respectively, which is fully ready for trial run. The commissioning is expected
from April 2020 onwards which delayed to previous expectation of around
February. Management is expecting 25% utilization in FY21. On SS front,
company has approval for production upto 18 inch diameter which they are
looking forward to production according to client requirement. Gradually, it
will take 2 years to reach 60-70% utilization levels of new capacity. The
opportunity is huge as currently there no other producer in India, hence
imports close to 40000 tonnes per year and there is huge export market for
these pipes. Based on latest budget, government spending on Oil & Gas
refinery and petro chemicals of around INR 1 lakh crore for National Grid
Programme, Cross Country Pipeline and CGD will boost order book in
coming quarters.
Current Order book stands at INR 1569 crores which includes orders from
SS and CS division at `1,053cr and `516cr, respectively. The export
contribution in overall oderbook is ~ `448cr while rest is domestic. The
orders are 100% made up from only Oil and Gas sector where margins are
higher compared to water segment. The company is amanging its cash well
and managed to increase its cash flow to `553cr in FY19 from `148 cr in
FY15. It’s debt dependency is also very low with a debt-equity of 0.05x.
Ratnamani regularly pays dividend of an average 15%. It currently trades at
a PE of 20.2x and delivers RoCE of 25.9%. Hence, Buy.
CMP `1,313
Reuters Code
BSE Sensex
Market Cap (` cr)
52 Week High / Low
Avg. Daily Volume
Face Value (`)
Jaikishan Parmar
022 3935 7600 Ext: 6810
Ratnamani Metals & Tubes Ltd
Others | Steel
Mar 02, 2020
Ratnamani Metals & Tubes|Steel
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Disclosure of Interest Statement Ratnamani Metals
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)