Innoventive Industries Ltd:-Buy/sell/,growth prospects and recommendation,news and results,target price and analysis,view and outlook,multibagger

Scripscan:Innoventive Industries Ltd
cmp:90
Code:533402

Story:Innoventive Industries (IIL) is a multiproduct engineering company currently engaged in the manufacturing and sale of precision steel tubes, tubular components, auto components, machined components and other steel products. It caters to diversified industries such as auto, farm equipments, general engineering and oil & gas in both domestic and export market with over 475 customers world wide. Its major customers include Bajaj Auto, BHEL, Thermax, John Deere India, Sundram Industries, Gabriel India and Alstom Projects.IIL is among the leading manufacturers of ERW/CEW tubes in India.It is approved tube supplier for domestic OEMs (Bajaj Auto is the largest customer) and caters to auto ancillary companies in and around Pune.The company has invented the use of cold pilgering process to make CEW tubes from ERW tubes without draw bench. As per the study conducted by the Indian Institute of Technology, Mumbai, this process saves energy costs up to 80%, minimizes usage of chemicals and reduces wastage of steel by 7% without compromising on the quality of the product. So far, this product has been well accepted by 93 customers worldwide and is sold under ARIDOM brand through long-term arrangement with Salem Steel North America, LLC. The company has applied for process and product patent rights for this with 33 countries and expects approval by FY 2012. This process already provides pricing advantage to the company on CEW tubes, acquiring the patent rights over the same would enhance the company's business and, thus, profitability.Membrane strips, made from steel coils and used in boilers and heat exchangers, are largely imported in India due to technical complexities. The company has developed in-house capacity to produce these membrane strips working as import substitute. This has been accepted well as the company is the largest domestic supplier of membrane panel strips to companies like BHEL, Thermax Limited, Alstom Projects India Limited, Cethar Vessels Limited. It provides savings for power generation equipment manufacturers such as Thermax and BHEL, while its high margin product for Innoventive.Currently the company enjoys various government benefits under the mega project status. The plant at Pimple Jagtap has been granted mega project status by the government of Maharashtra. This entails several benefits to the plant such as electricity duty exemption for the period of seven years till November 2015, 100% exemption from payment of stamp duty and industrial promotion subsidy (IPS) equivalent to 75% of the eligible investment to be made from March 28, 2007. Also the company is availing interest free sales tax deferral loan from the government due to its presence in backward area. The repayment of sales tax deferral loan will start from FY 2014 onwards.It should deliver an EPS of 12-13rs going forward.At present prices its a hold.Comparable peer tube investments is almost quoting same valuation.