Buy Ratnamani Metals & Tubes, target Rs 1,100: ICICI Direct
Ratnamani Metals & Tubes is a midcap company, operating in iron and steel sector.
ICICI Direct has given a buy recommendation on Ratnamani Metals & Tubes with a target price of Rs 1,100.
Shares of Ratnamani Metals & Tubes traded at Rs 943.2 around 1 pm on 4 June, 2019. The brokerage has set a one-year horizon for the stock to hit the target price.
"Ratnamani reported a mixed set of Q4FY19 numbers wherein the topline came in lower than our estimates while Ebitda margin and PAT came in broadly line with our estimate," said the brokerage.
Ebitda for the quarter was at Rs 99.1 crore, up 6.8 per cent YoY, down 1.7 per cent QoQ, lower than the brokerage's estimate of Rs 106.4 crore. PAT was at Rs 63.2 crore, up 12.4 per cent YoY and 0.7 per cent QoQ, broadly in line with the brokerage's estimate of Rs 64.4 crore.
The stainless steel division reported sales of 5,406 tonnes, in line with the brokerage's estimate of 5,425 tonne. The carbon steel division sales came in at 72,153 tonnes, marginally lower than the brokerage's estimate of 74,375 tonnes.
"Total operating income for the quarter was at Rs 686.7 crore, up 10.9 per cent YoY, down 5.7 per cent QoQ, lower than our estimate of Rs 734.1 crore. The Ebitda margin came in at 14.4 per cent, up 50 bps QoQ, down 60 bps YoY, in line with our estimate of 14.4 per cent," the brokerage added.
As per the brokerage, the Indian oil and gas sector is at the cusp of a capex revival on the back of enhancement of domestic refining capacity and upgradation of refineries to meet the BS VI standard by 2020.
"We remain positive on the overall demand prospects, given significant investments planned by the government in the oil and gas sector, city gas distribution and water transportation boosting the overall pipes demand - both stainless steel and carbon steel," said the brokerage.
In the medium to longer term horizon, notable capex is planned in power (both thermal and nuclear), city gas distribution (CGD), etc. This is expected to enhance the overall demand for pipes, the brokerage added.
The firm order book in both carbon steel and stainless steel augurs well for the company. "We introduce FY21E and value the stock on 10 times FY21E EV/Ebitda to arrive at a target price of Rs 1,100," said the brokerage.
Shares of Ratnamani Metals & Tubes traded at Rs 943.2 around 1 pm on 4 June, 2019. The brokerage has set a one-year horizon for the stock to hit the target price.
"Ratnamani reported a mixed set of Q4FY19 numbers wherein the topline came in lower than our estimates while Ebitda margin and PAT came in broadly line with our estimate," said the brokerage.
Ebitda for the quarter was at Rs 99.1 crore, up 6.8 per cent YoY, down 1.7 per cent QoQ, lower than the brokerage's estimate of Rs 106.4 crore. PAT was at Rs 63.2 crore, up 12.4 per cent YoY and 0.7 per cent QoQ, broadly in line with the brokerage's estimate of Rs 64.4 crore.
The stainless steel division reported sales of 5,406 tonnes, in line with the brokerage's estimate of 5,425 tonne. The carbon steel division sales came in at 72,153 tonnes, marginally lower than the brokerage's estimate of 74,375 tonnes.
"Total operating income for the quarter was at Rs 686.7 crore, up 10.9 per cent YoY, down 5.7 per cent QoQ, lower than our estimate of Rs 734.1 crore. The Ebitda margin came in at 14.4 per cent, up 50 bps QoQ, down 60 bps YoY, in line with our estimate of 14.4 per cent," the brokerage added.
As per the brokerage, the Indian oil and gas sector is at the cusp of a capex revival on the back of enhancement of domestic refining capacity and upgradation of refineries to meet the BS VI standard by 2020.
"We remain positive on the overall demand prospects, given significant investments planned by the government in the oil and gas sector, city gas distribution and water transportation boosting the overall pipes demand - both stainless steel and carbon steel," said the brokerage.
In the medium to longer term horizon, notable capex is planned in power (both thermal and nuclear), city gas distribution (CGD), etc. This is expected to enhance the overall demand for pipes, the brokerage added.
The firm order book in both carbon steel and stainless steel augurs well for the company. "We introduce FY21E and value the stock on 10 times FY21E EV/Ebitda to arrive at a target price of Rs 1,100," said the brokerage.
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