Guys it has been a great blogging journey for me since the last 7 years.The blog has got tremendous response and accolades from all over the world.It has been visited over 1.7 million times since its inception.I am quite determined of doing the same work of guiding you people till eternity.Anyways being my well wishers and admirers, I feel great to let you folks know that I am turning 26 years of age on day after tomorrow,i.e,20th of march.You can send all your blessings and wishes by either mailing me or texting me on my number.Please put your name folks so that I can figure you out.
A high conviction bet:-
Scripscan:Ratnamani Metals and Tubes Ltd
Target:10% in short term,20% in medium term and 40-50% in a year's time
Long term target:25-30% CAGR for coming 5 years
Business:Ratnamani Metals and Tubes Ltd produces carbon steel welded pipes and stainless steel welded/seamless tubes and pipes.It got a stainless steel capacity of 27,000 metric tonne (20,000 for welded pipes and 7,000 for seamless pipes) and 350,000 tonne of carbon steel.Ratnamani provides high frequency welded pipes, electric resistance welded pipes, saw pipes, seamless tubes and pipes, welded tubes etc. The company serves various industries including power plants, refineries, water distribution, petrochemicals, fertilisers, irrigation, process industries and oil and gas sector.Ratnamani has an impressive clientele comprising major public, private and joint sector Companies in the country who are leaders in their respective segments.The company exports its products to around 16 countries.Over the years company has expanded its capacities to handle more critical grades and specialty tubes for the stainless steel division along with increasing capacity of carbon steel pipes on the other. Ratnamani's manufacturing facilities are located at Chhatral and Indrad on Ahmedabad – Mehsana Highway and at Bhimasar, Kutch, on Bachau – Anjar Road.
Fiscal 12-13:Despite the challenging scenario,the Company continued to be successful and has performed well.The major factors attributable to this include strong business initiatives strengthened with the sound domain knowledge, consistent product quality aligned to customer expectations, product mix, captive skills partnered with cost consciousness and persistent focus on efficiencies.During the year 2012-13, revenues from operations were Rs. 1200crs though reduced marginally but PBT increased by 44.80% from Rs. 139 crs to Rs 201 crs and profit after tax surged 44.15% from Rs. 94 crs to Rs. 136 crs.EPS went up by 21.92% from Rs. 23.90 to Rs. 29.14,strengthening shareholder''s value.Company basically capitalized on the interest front as its debt came down from 275crs in fy12 to just 120crs in fy13.
What I like the most:Ratnamani with over 50% market share is the leader in production of stainless steel pipes.It also got the distinction of India's only company to be approved by Nuclear Power Corp to supply pipes for heat exchanges in nuclear reactors and instrumentation tubes.Its diversified clientele insulates it from the vagaries of any sectoral slowdown.On words of the management,"We have consciously turned conservative, concentrating on only those segments where we see good potential for growth. We are now focusing on the stainless segment and high-value products to ensure that returns stay healthy".The company enjoys one of the best operating margins in the industry,thanks to its initiative of buying inputs on bulk only when the orders are ready to be executed.There's not much inventory to talk about either.Sales have grown at an amazing speed of 29% in the last 10 years,from 118crs to 1200crs in fy13.Profits too have galloped at a superior pace of 48% CAGR,4crs to 136crs.Company has managed the slowdown perfectly and has been able to grow its profits year after years.It will continue to grow 15-20% for the coming few years,ones the cycle picks up Ratnamani may even grow at say 40-50% CAGR.
Conclusion:Net profit of Ratnamani Metals & Tubes rose 13.59% to Rs 35.94 crore in the quarter ended December 2013 as against Rs 31.64 crore during the previous quarter ended December 2012. Sales rose 28.09% to Rs 334.41 crore in the quarter ended December 2013 as against Rs 261.08 crore during the previous quarter ended December 2012.The business model is one of its kind.With manageable debts and signs of a revival in the cycle-Ratnamani looks all set to perform extravagantly again.The company will end the fiscal with revenues of around 1320crs and a PAT of 145crs.Its trading at just 5 times its fy14 earnings(fy13-14 EPS expected to be 33 bucks).So how to value a company which has grown by leaps and bounds,survived the down cycle and managed its profits well,got ROE and ROCE of over 20% backed by a visionary pedigree and investors like Nalanda and IDFC?Buy it for any term folks.As soon as the market realizes the potential and the story,scrip would get heavily rerated in the bourses.The company has never skipped a dividend in the last ten years.Ratnamani over the last 12 years has seen its stock price moving over 100 times.With its business model and sound strategies in place,it looks to be another 10 bagger in the coming 7-8 years.Huge upsides and limited downsides to make the quintessence.
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