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Sunday, February 13, 2011

Sturdy Industries Ltd:Buy/sell/hold,growth prospects and recomendation,news and results,target price and analysis,views and outlook

Scripscan:Sturdy Industries Ltd

Story:The Company's business segments comprise the following:Pipes, sprinkler, drip irrigation systems and others,Aluminum composite sheets and Asbestos cement sheets.Its a 280 odd cr company with PAT of around 6crs but ther's certainly lot more that meets the eye.It has got tremendous expansion plans:-

1)A gas-based power project of 200 MW capacity in Punjab, wherein Phase 1 of 100 MW is to be commissioned before march 2012 with an estimated capex of Rs. 400 crores.

2)A Hydro Power Project in Himachal Pradesh for 3MW capacity,with an estimated capex of Rs. 21 crores and the same is under implementation.The same is for the captive consumption of Company units at almost half of the prevailing prices of power.

3)Proposed manufacture of drip irrigation equipment with large diameter (upto 1000 mm) HDPE and PVC pipes involving a Rs. 65 cr.Outlay at Baddi(Himachal Pradesh),a tax free zone.

4)New project for the manufacture of aluminium conductors for PowerGrid Corporation, having 30,000 MTPA capacity with an estimated capex of Rs. 60 cr.

Export potential:The Company appointed an exclusive distributor in Slovakia to deepen its presence in Slovakia, Austria, Rumania, Hungary, Poland and Germany.It exported aluminium rods, wires and composite panels, among others tothe European Union, Egypt, Mauritius, Spain, Switzerland and Bulgaria,among others.

Conclusion:We should highly appreciate the fact that a 16crs marketcap company is aiming sich aggresive and ambitious expansion plans worth around 550crs.Am not sure about its ability to tie-up finances for such mammoth projects.Mr. M.L Gupta, Mr. Ramesh Gupta and Mr.Amit Gupta,The promoters are visionary and enjoys good repute in the industry.On the operational front too the company is expected to post a 50% jump in its profits in the present fiscal.At present price of 4rs it looks to have minimal downside but if they succeeds in materializing those projects,It can be a counter to watch for.

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