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Tata Metaliks
Tata Metaliks is the largest producer of foundry grade Pig Iron with an installed capacity of 6.50 lakh TPA. The company has two plants, each of 3.25 lakh TPA, one at Kharagpur and another one at Redi in Maharashtra having acquired of Usha Ispat, which was made operational in January 06, with all three blast furnace of this unit now operational.
In FY 07, the total production of Pig Iron was at 4.19 lakh MT while in first half of FY 08 it was at 2.46 lakh MT.
The company has applied for iron ore mines in Jharkhand, Orissa, Sindhudurg in Maharashtra and Hospet in Karnataka as also applied for Coking Coal Blocks in Madhya Pradesh. The applications are pending at various stages of processing, which would provide, (on availability, continuous and cheapest source of raw materials to the company.
To reduce its dependency on a single product, the company is foraying into Castings and Ductile Iron Pipe manufacturing.
For making 1.10 lakh TPA Ductile Iron Pipes, the company, formed a Joint Venture to set up this project with an outlay of Rs.150 crores being set up at Kharagpur which would use liquid pig iron. The JV company would have an equity of Rs.75 crores and Debt of Rs.75 crores and plant would be operational by March 09. In this JV, the company would have 51%, while 44% would be held by Kubota Corporation and 5% by Metal One, both of Japan. Kubota Corporation are world renowned manufacturer of Ductile Iron Pipes.
For FY 07 the total income of the company was at Rs.696, EBITDA of Rs.69.31 crores, PBT of Rs.42.17 crores, PAT of Rs.29.51 crores, resulting in an EPS of Rs.11.67 on equity of Rs.25.29 crores. The company paid a dividend of 60% for the year.
For H1 FY 08, the total income of the company was at Rs.458 crores with EBITDA of Rs.60 crores, PBT of Rs.43.08, PAT of Rs.28.21 crores giving an EPS of Rs.11.15. The expected working in second half is likely to be better, which could ultimately result in an EPS of Rs.25 for FY 08.
The present equity of the company is at Rs.25.29 crores, of which, promoters stake is 47.66%, while 7.49% is held by MF, Banks and FIIs, with 44.85% being held by the Public.
The net worth of the company as at 31-03-07 was at Rs.160 crores while total debt of the company was at Rs.115 crores, resulting in a debt equity ratio of 0.72 : 1. This is, inspite of having acquired its second unit at Redi in Maharashtra, of Usha Ispat,
The prospects of mines allotment of iron ore and coking coal are quite good and once that happens, it would vastly improve the profitability of the company.
The share is presently ruling at Rs.165 which discounts expected EPS for FY 08 of Rs.25 by about 7 times. The share is ruling quite cheap when compared to other pig iron manufacturers like Kirloskar Ferrous, Lanco Industries and Sathavahana Ispat which have lower EPS, thus having higher PE multiples.
The share has potential to cross Rs.250 mark in the next 10 12 months, which makes it an ideal buy at Rs.165 levels.
Tata Metaliks is the largest producer of foundry grade Pig Iron with an installed capacity of 6.50 lakh TPA. The company has two plants, each of 3.25 lakh TPA, one at Kharagpur and another one at Redi in Maharashtra having acquired of Usha Ispat, which was made operational in January 06, with all three blast furnace of this unit now operational.
In FY 07, the total production of Pig Iron was at 4.19 lakh MT while in first half of FY 08 it was at 2.46 lakh MT.
The company has applied for iron ore mines in Jharkhand, Orissa, Sindhudurg in Maharashtra and Hospet in Karnataka as also applied for Coking Coal Blocks in Madhya Pradesh. The applications are pending at various stages of processing, which would provide, (on availability, continuous and cheapest source of raw materials to the company.
To reduce its dependency on a single product, the company is foraying into Castings and Ductile Iron Pipe manufacturing.
For making 1.10 lakh TPA Ductile Iron Pipes, the company, formed a Joint Venture to set up this project with an outlay of Rs.150 crores being set up at Kharagpur which would use liquid pig iron. The JV company would have an equity of Rs.75 crores and Debt of Rs.75 crores and plant would be operational by March 09. In this JV, the company would have 51%, while 44% would be held by Kubota Corporation and 5% by Metal One, both of Japan. Kubota Corporation are world renowned manufacturer of Ductile Iron Pipes.
For FY 07 the total income of the company was at Rs.696, EBITDA of Rs.69.31 crores, PBT of Rs.42.17 crores, PAT of Rs.29.51 crores, resulting in an EPS of Rs.11.67 on equity of Rs.25.29 crores. The company paid a dividend of 60% for the year.
For H1 FY 08, the total income of the company was at Rs.458 crores with EBITDA of Rs.60 crores, PBT of Rs.43.08, PAT of Rs.28.21 crores giving an EPS of Rs.11.15. The expected working in second half is likely to be better, which could ultimately result in an EPS of Rs.25 for FY 08.
The present equity of the company is at Rs.25.29 crores, of which, promoters stake is 47.66%, while 7.49% is held by MF, Banks and FIIs, with 44.85% being held by the Public.
The net worth of the company as at 31-03-07 was at Rs.160 crores while total debt of the company was at Rs.115 crores, resulting in a debt equity ratio of 0.72 : 1. This is, inspite of having acquired its second unit at Redi in Maharashtra, of Usha Ispat,
The prospects of mines allotment of iron ore and coking coal are quite good and once that happens, it would vastly improve the profitability of the company.
The share is presently ruling at Rs.165 which discounts expected EPS for FY 08 of Rs.25 by about 7 times. The share is ruling quite cheap when compared to other pig iron manufacturers like Kirloskar Ferrous, Lanco Industries and Sathavahana Ispat which have lower EPS, thus having higher PE multiples.
The share has potential to cross Rs.250 mark in the next 10 12 months, which makes it an ideal buy at Rs.165 levels.
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