Docstoc

Rathi steel and Power limited Visit us at money.umakant.info

Document Sample
Rathi steel and Power limited Visit us at money.umakant.info Powered By Docstoc
					JUNE 7TH ,2008 CMP-20.5 ORIGINAL RECOMMENDATION PRICE 24.8 BSE CODE:-504903 http://www.teamsr.co.cc/

A Report by Team Stock Researchers

Company Overview:• Rathi steel and power limited( Formerly rathi udyog limited) is a 35 years old steel company. The company is owned and operated by Punam chand Rathi and his son Pradeep Rathi . The company originally started its production in 1972 with the first rolling mill in Ghaziabad in Uttar pradesh.In 2001 company started the production of Thermex Tmt bars under “Rathi” brand.The company’s ghaziabad plant had an installed capacity of 125000 tonnes per annum in 2005 and 40000 tonnes of rolling capacity.. "Rathi steel and power plant in Ghaziabad is in the manufacture of long products including bars, wire rods, angles and channels which form the skeleton of all kinds of construction. With the huge amount of investments initiated and awaited in the construction industry, the demand for these products, which are to the tune of 20-25% of the total investment, seems to be a no look back at least for the next five-seven years. In 2005 the company signed a MOU with the Government of Orissa for setting up a 0.3 mtpa sponge iron, steel billets and captive power plant by taking advantage of the Industrialization policy of the state government and the abundant supply of coal and iron available in the vicinity. The Orissa project has been set up on 250 acres of land in sambhalpur in orrisa.The plant is to be constructed in two phases with the first phase of 150000 tonnes per annum of sponge iron and 30Mw of captive power plants.The second phase has an almost similar capacity expansion.

•

•

•

•

Investment Rationales:• Over the years company has been a dividend paying company. Moreover at the Cmp of Rs 20.5 the stock is trading at 60% discount to its Ipo price of 50 rs. Although the main trigger for our recommendation is not the steep discount on the Ipo price. Two of our earlier recommendations in the very same space Jayasawals neco at 17 levels and Mspl at 18 levels. (Refer the premium client’s mailer.) were

•

•

• •

• •

Multibagger recommendations. We expect something similar for Rathi steel and power going ahead. Read the full report to know more about the same. Rathi turnover in FY08 was 517 crs and 30% of it was trading turnover. Going forward in FY09E turnover is 730 crs. Rathi has a small equity base of 24 crs divided into 2.4 crs shares. The 0PM is currently 4% and NPM is of 1%.Expect the same to get improved as the expansion of the company after an years delay is now operational with full capacity. The current capacity of the company in sambhalpur is 150000 tones of sponge iron and steel billets plant along with 30 MW captive coal block. The reason I expect the OPM and NPM to improve is that the company is now being allotted captive coal linkages. If Long-term investors and clients of Team StockResearchers remember one of our picks MSPL had also moved vertically after it was allotted a coal block in consortium. The company is getting LOA for its captive power plant of 30MW and 75% of its required quantity of 240000 tones for its sponge iron plant. We expect the LOA to be announced in next 3-5 months. Once the company gets the coal linkages for its sponge iron and power plant is approved. We can expect a vertical move in the stock.

Financial synopsis:SOURCE-ASIAN CERC/TSR RESEARCH BSE: 504903 Industry : Steel – Rolling Yearly Results ------------------- in Rs. Cr. ------------------Mar '04 Mar '05 Mar '06 Mar '07 Mar '08 Sales Turnover Other Income Total Income Total Expenses Operating Profit Profit On Sale Of Assets Profit On Sale Of 187.57 0.14 187.72 183.61 3.96 --282.14 0.21 282.35 275.28 6.86 --299.78 0.11 299.89 282.93 16.85 --401.60 0.65 402.25 383.38 18.22 --517.88 0.53 518.41 494.26 23.62 --NSE: N.A ISIN: INE336C01016

Investments Gain/Loss On Foreign Exchange VRS Adjustment Other Extraordinary Income/Expenses Total Extraordinary Income/Expenses Tax On Extraordinary Items Net Extra Ordinary Income/Expenses Gross Profit Interest PBDT Depreciation Depreciation On Revaluation Of Assets PBT Tax Net Profit Prior Years Income/Expenses Depreciation for Previous Years Written Back/ Provided Dividend Dividend Tax Dividend (%) Earnings Per Share Book Value Equity Reserves Face Value ------4.10 1.01 3.10 1.29 -1.81 0.53 1.28 0.29 ----2.71 -4.71 -10.00 ------7.07 1.23 5.83 1.22 -4.61 1.61 3.00 -0.05 ----6.37 -4.71 15.27 10.00 ------16.96 2.70 14.26 2.25 -12.01 4.41 7.60 --2.00 -2% 16.14 -4.71 21.93 10.00 ------18.87 4.88 13.99 3.23 -10.76 1.43 9.33 --0.50--5% 3.84 48 24.31 121.99 10.00 ------24.15 8.93 15.23 4.58 -10.65 1.20 9.45 -----3.89 51.2 24.31 125-10.00

Summary :Our research says that the reason for the down move seen in the stock is the lackluster Opm and the selling pressure by Banks and other Ipo investors Use the current dip in the stock to ACCUMULATE the stock and Use rally above 36 to make your investments Free in the company. Time frame for investment should be minimum 18 months on the stock.

Research note prepared by Vinayak, Varun Jain. http://www.teamsr.co.cc/ MANDATORY DISCLOSURES: This document is for information only and is meant for the use of the recipient & not for circulation. The information contained in this document has been taken from publicly available information, trade and statistical services & other sources. While the information contained herein is from sources believed to be reliable, we do not hold ourselves responsible for its Completeness and accuracy. All opinions and estimates included in this report constitute our judgment as of this date and are Subject to change without notice. Investors are expected to use the information contained in this report at their own risk. This report is not and should not be construed as an offer or the Solicitation of an offer to buy or sell any securities. TEAM STOCKRESEARCHERS and its affiliates may act as market maker or have assumed an underwriting position in the securities of companies discussed herein and may sell them to or buy them from customers on a principal basis. THE STOCK IS HELD IN THE LONG TERM PORTFOLIOS OF THE AUTHORS


				
DOCUMENT INFO
Shared By:
Categories:
Stats:
views:203
posted:1/15/2010
language:English
pages:5