Buy Ratnamani Metals, target price Rs 1320: ICICI Direct

ICICI Direct has given a buy rating to Ratnamani Metals & Tubes with a target price of Rs 1320. The share price moved down by 0.51 per cent from its previous close of Rs 1284.95. The stock’s last traded price is Rs 1278.35.

Ratnamani Metals & Tubes Ltd., incorporated in the year 1983, is a Mid Cap company (having a market cap of Rs 5981.18 Crore) operating in Metals - Ferrous sector.

Ratnamani Metals & Tubes Ltd. key Products/Revenue Segments include Stainless Steel Tubes & Pipes which contributed Rs 2522.17 Crore to Sales Value (97.63 % of Total Sales), Other Operating Revenue which contributed Rs 30.29 Crore to Sales Value (1.17 % of Total Sales), Sale of services which contributed Rs 24.24 Crore to Sales Value (0.93 % of Total Sales) and Power Generation which contributed Rs 6.44 Crore to Sales Value (0.24 % of Total Sales)for the year ending 31-Mar-2020.

Financials
For the quarter ended 30-06-2020, the company reported a Consolidated sales of Rs 578.07 Crore, down 8.11 % from last quarter Sales of Rs 629.09 Crore and down 1.63 % from last year same quarter Sales of Rs 587.67 Crore. The Company reported net profit after tax of Rs 49.71 Crore in latest quarter.

Investment Rationale
For Q2FY21E, the brokerage expects Ratnamani's stainless steel segment to report sales volumes of 5775 tonne (up 43.5% QoQ but down 0.7% YoY) and carbon steel segment to report sales volume of 61250 tonne (up 4.6% QoQ, 20.6% YoY). Ratnamani's topline is likely to increase 1.1% YoY, 6.7% QoQ to | 617 crore while the EBITDA is likely to increase 23.6% QoQ but down 21.9% YoY to | 91 crore. The brokerage expects the EBITDA margin come in at ~14.8% (EBITDA margin of 12.7% in Q1FY21, 19.1% in Q2FY20). PAT is likely to come in at | 65 crore (up 31.4% QoQ but down 14.5% YoY)