Sharekhan has given Buy recommendation for Ratnamani Metals and Tubes with a target price of Rs. 2285 in its research report issued on Sep 20, 2022
Sharekhan’s research report on Ratnamani Metals and Tubes
Large order win of Rs. 1,186 crore takes Ratnamani Metals & Tubes Limited’s (RMTL’s) order book to all-time high of Rs. 3,214 crore, implying a 37% rise over Q1FY23. Company won a major Rs. 800-crore order in water transportation segment with decent margin of 14-15%. Strong order book position and robust bid pipeline offer confidence on revenue growth of over 20% for FY23 and 20% CAGR over FY22-25E. Overall, we expect RMTL to post a robust 24% PAT CAGR over FY22-25E with healthy RoE/RoCE of 18%/23%. RMTL has planned new capex of Rs. 350 crore in 18-24 months for expansion of both CS/SS capacities and the same bodes well for growth beyond FY24E.
We maintain a Buy on RMTL with a revised PT of Rs. 2,285 as RMTL’s dominant domestic position makes it key beneficiary of demand recovery in steel tubes and pipes. Stock trades at 26.6x its FY2024E EPS and 22.5x its FY2025E EPS.