Sharekhan has given Buy recommendation for Ratnamani Metals and Tube with a target price of Rs. 2500 in its research report issued on Dec 03, 2021
Sharekhan’s research report on Ratnamani Metals and Tube
New order bookings grew by 2.3x y-o-y to Rs. 2,700 crore during April-Nov’21 and management sees monthly order execution of Rs. 250-300 crore. Thus, we believe that management is on track to achieve revenue growth guidance of 31% y-o-y for FY22. Large opportunities from oil & gas, CGD and water transportation sectors would result in annual order inflow of over Rs. 3,000 crore for next couple of years while ramp-up in utilisation of recently-expanded carbon steel/stainless steel capacity would take margin to historical average of 17-18%. Overall, we expect RMTL’s revenue/EBITDA/PAT to clock 24%/23%/21% CAGR over FY21-24E given potential improvement in order execution with likely pick-up in capex plan of domestic clients and higher export order with approval of RMTL’s new plants by international customers.
Hence, we maintain a Buy on RMTL with an unchanged PT of Rs. 2,500 as RMTL’s dominant domestic position makes it key beneficiary of demand revival in steel tubes and pipes. Stock trades at 23.4x its FY2023E EPS and 19.7x its FY2024E EPS.