Avoid Mishra Dhatu Nigam IPO : HEM Securities

MISHRA DHATU NIGAM is one of the leading manufacturers of special steels, Superalloys and only manufacturer of titanium alloys in India. These are high value products which cater to niche end user segments such as defence, space and power. Company manufactures unique combinations of metal and alloys. Co manufacture special steels like martensitic steel, ultra high strength steel, austenitic steel and precipitation hardening steel. Co manufacture three varieties of Superalloys – nickel base, iron base and cobalt base. Co also manufacture varieties of titanium alloys. With the growth of business and operations, co have achieved the status of a Mini Ratna.

Valuation

Co is bringing the issue at p/e multiple of almost 29 on post issue H1FY18 annualized eps at price band of Rs 87-90/share. Although co has most advanced and unique facilities & capability to manufacture wide range of advanced product but weak order book size of Rs 517 Cr against strong topline in FY16 & FY17 doesn’t infuse optimisim in company. Hence, we recommend “Avoid” on issue.

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