Sunday, April 11, 2010

Rathi Steel & Power...cmp..Rs.21.60....A Value Pick...

Friends,
I am today writing on Rathi Steel & Power Ltd.Its old name was Rathi Udyog Ltd . Rathi Steel & Power Ltd has come a long way after it changed its name from Rathi Udyog Ltd to Rathi Steel & Power Ltd....
The huge investment made by the Co is now bearing fruits and that is seen in the bottomline too.....
The NP has gone up from 1 cr to 5 cr in Dec 09 qr from last qr..
Eq is 24 cr but the Mcap is just 52 cr while sales is 798 cr for the whole last year.....means again we can say that a Co of 800 cr with making profit is available at just 52cr......
Promoters has taken stake at Rs 22 which speaks confidence of Promoters in the Co while the price is still at the same rate.....
In Aug 2008 Co decided to enhance the capacity to 1.6 MTPA by investing 2500 cr. Co also decided to enhance the melting capacity at Ghaziahad from existing 40,000 Tons to 75,000 Tons with an investment of approx. Rs 15 Crores.

PLANTS/ PROJECTS:

GHAZIABAD PLANT

The Ghaziabad Plant consists of Steel Rolling Mills having an installed capacity of 1,25,000 TPA, a high speed No Twist Block Wire Rod Mill and Steel Melting Shop with 40,000 TPA installed capacity comprising of Induction Furnace, AOD Converter, Continuous Casting machine and other facilities for manufacturing high end value- added stainless steel and alloy steel products. We intend to further add value to the products being manufactured by us by converting them into bright bars, wires, flanges etc.


ORISSA PROJECT


Considering the Orissa Government’s aggressive efforts for rapid industrialization of the State and future industrial growth of the Country, the Company has planned to setup an integrated Steel Project at village Potapali-Sikirdi, district Sambalpur (Orissa). The Company has already entered into an MOU with the Orissa Government for setting up the project. The project comprises of facilities for manufacture of 300,000 TPA Sponge Iron, a Steel Melting Shop of 5,00,000 TPA, Pig Iron of 200,000 TPA and captive Power Plant of 50 MW, to be implemented in phases, as per detailed Techno-Economic Feasibility Report submitted to the Orissa Government. The progress on the first phase of the project at a project outlay of Rs.220.50 crore, is going on at full swing and is expected to be completed by September 2006


INDORE PLANT


We intend to make the Orissa plant a primary source of raw material for the existing rolling mills of the Punam Chand Rathi Group and also for the future rolling mill plants that we intend to setup all across the country. A chain of value addition from iron ore, sponge iron, captive power, steel making at the Orissa plant, to various rolling mills across the country will lead to tremendous synergy and will enable us to service our customers better by providing high quality products at competitive prices.


The promoters have also promoted a new company viz. Rathi Iron And Steel Industries Limited who has installed a Steel Rolling Mill project having capacity of 50,000 TPA at Pithampur Industrial Area, Distt. Dhar (M.P.). The production facilities are similar to that of Ghaziabad project and are well equipped with the latest technologies for producing quality CTD and TMT bars. The commercial production has already taken place and the products are being well accepted in the market.


Chairman Speech:


For Rathi Udyog Ltd., the art of steel making is a magnificent obsession. And for over six decades, we have been honing our skills to become the perfect steel artisan. A reputation that is based on our ability to recognize and meet the needs of the growing steel market. Since our inception, we have been diligently sharpening our competitive edge by proactively responding to our customers needs even during tough economic weather and geopolitical storms.

Undeterred by rough seas, we grew stronger with coherent strategies that have created new high earning profit centers in the Indian construction industry. As a result of these unstinting initiatives, we were the first to manufacture CTD reinforcement rebars in India in collaboration with Tor Isteg Steel Corporation, Luxemburg through its Indian representative Tor Steel Research Foundation In India ensuring 40% savings in steel consumption and giving the Indian Construction Industry a much-needed impetus. Also we are the first to produce TMT Bars in North India using the patented “Thermex” Technology of HSE, Germany.
In the year ahead our focus would be to sustain growth and we will do our utmost to further establish a profit-maximization philosophy through cost reduction and bold restructuring of uncompetitive and non-core sectors, while strengthening our balance sheet with operations generated cash flow. We also firmly intend to progress forward with our management strategy which primarily includes completing the ongoing expansion plans of enhancing our production facilities in the states of Orissa, Madhya Pradesh and Uttar Pradesh.
Living in an era of cut-throat competition among formidable competitors we have built our strength through sustaining our focus on market-leading products. In the year ahead and the ones to follow we will further our efforts to augment our competitive position by moving closer to our customers and expanding our presence to global shores. Together with the support of our esteemed clientele and steely resolve we aim for a Strong, Resurgent and Focused Rathi.”


PC Rathi


Chairman

While looking at all the above views I feel Rathi Steel & Power looks excellent pick for Medium to LT ....Co has started making profit since last 2 qrs with last qr being excellent.....with lots of Infrastructure coming up in Orrisa and in whole of India, I feel that Rathi Steel & Power Ltd will have a very good time ahead..

15 comments:

  1. Sir Rajeev,

    What a fantastic pick you give sir...i like it and i will be a net buyer from Monday...

    800 Cr. sales is not a child's play..What i most like about this co. is sales to equity ration is very low...

    Thanks sir..One request sir...You did not give target price..

    ReplyDelete
  2. Rajiv ji
    i buy this scrip@19 on 17-12-2009 and exit@ 23.50 on 5-1-10.i always try to buy any scrip at lower level but exit when i see above 20% return in short term. i dont know which hen give golden egg or simple egg due to lake of huge knowledge like you.
    if i receive your full guidance and advice i also enjoy full juice from my scrip because in past i eat only part of fruit like monkey and search another fruit. this is a big mistake of my investment life because most of time i sell gold and buy brass.
    i request you please give some attenson on me and give your guidance for make my good new long term portfolio.
    i want slowly slowly exit from all kachra and underperform stocks.
    thanks with best regard

    ReplyDelete
  3. Dear Mr Desai,
    Is there any particular reason that Sujana Towers is moving in the range of Rs 50-54 and Telecanor global in the range of 30-35 for a long long long time or is it that it is normal for them to do so. Is this a case of manipulation of the share price bcoz they just do not go up or down. Does any one have any info on this please? Regards

    ReplyDelete
  4. Hi Radhika,
    Is that Radhika Nandlal from MMB.....?
    How r u?....
    Well,Sujana Towers is supressed by players to frustrate and people sell it.....I have no doubt about the fundamentals of Sujana Towers...while in Telecanor Global...it is all messed up...so no view as of now....

    ReplyDelete
  5. ashok mahajani ji,

    I too used to make the same mistake. so what i did was to keep atleast a few shares and not sell completeley. i think u too can follow this stratagy if u like it.

    ReplyDelete
  6. http://www.scribd.com/doc/26543383/Rathi-Steel-and-Power-Ltd-REPORT-DATED-7th-JUNE-2008

    Recent report on Rathi steel and power

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  7. kapil,
    I never give targets......

    ReplyDelete
  8. Thanks rajiv for the call. I bought 1000 units of Rathi as per your recommendation. Hope to make decent profits in around 6-8 months.

    Thanks,
    Ramki

    ReplyDelete
  9. Hi RajeevJi B4 I could lay my hand Rathi Steel and Power in UC ?? Hats off to your research and more for your sharing it with all the readers !!!! With due regards and respect

    ReplyDelete
  10. Dear Rajeev

    Would love to have your views on Gallantt Metal- another small cap (230 Cr Market Cap against an expected FY10 revenue of Rs. 400 Cr+)steel stock with excellent upgrades in q-o-q profit figures. Kindly share your thoughts.

    Thanks
    Ankit

    ReplyDelete
  11. Hi Ankit,
    I don't track Gallant Metal....but have a look at MSP Steel&Power..with almost same Mcap and same Eq and same sales.....The best thing in MSP is, promoters hold 70% stake....

    ReplyDelete
  12. Rajiv ji
    i reenter in rathi steel on friday. i sell my 50% holding in gmr ferro alloy at which price i cover my holding.
    i m very bullish in steel sector i request u please help me to choose some good scrip for long term at cmp.
    i understand U are very busy person due to ONE MAN ARMY but if u spare some time for me i am highly obliged.

    ReplyDelete
  13. have you considered their debt levels?
    they have over 317 crores in o/s liabilites
    there interest expense has gone from 1cr in 2005 to 30cr in 2009. i guess that explains why their market cap is only 55cr.

    thank you

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  14. aditya,
    if they have invested 2500 cr which I wrote in the post then it is nothing alarming......Rs.2500 cr investment is huge and the fruits that will be reaped will also be huge.....

    ReplyDelete
  15. hi rajeev
    rathi steel & power has again come to the levels of Rs 14.5 or so.
    how do u see the fundamentals of this coy now?
    Is it still a value buy at this level?

    with regards
    surjeet

    ReplyDelete