Mahalaxmi Seamless - Rs.33.50

Incorporated in 1991, Mahalaxmi Seamless Ltd (MSL) is primarily engaged in the manufacture and supply of seamless straight and U bend tubes made of carbon and low alloy steel. More than a decade old, this company is today among the largest manufacturers of cold drawn seamless pipes and tubes in India. Ranging from over 6 mm to 100 mm in outer diameter and 0.9 mm to 6.0 mm in wall thickness, the product range at Mahalaxmi Seamless encompasses straight pipes and tubes upto 28 metres as also U-Tubes. MSL’s products meet the demands of India's bludgeoning bulk process industries i.e. petroleum, chemicals, fertilisers, thermal power plants besides the oil processing, sugar mills and automobile industries. Typical applications of its tubes include boilers, heat exchangers and condensors besides pneumatics and instrumentation.

MSL’s manufacturing plant is located at Nagothane in Raigarh District of Maharashtra. Just 110 km from Mumbai on the Mumbai-Goa highway, the plant has good road connections to all important ports and destinations and has an installed capacity of about 10,200 TPA. As MSL caters to a large range of industries and applications, it needs to meet a variety of international standards since many plants are established under foreign technical collaboration. Hence all its products are manufactured according to international standards of ASTM, BS, BIS, DIN and SAE etc. Besides, the company has a rigorous quality assurance programme. Notably, MSL’s products are approved and regularly inspected by leading agencies including Lloyds, Bureau Veritas, Engineers (India) Ltd (EIL), DNV, Toyo Engineering and UHDE. Moreover the Indian Boiler Regulation (IBR) Board has awarded this company with the title of ‘Well-known Tube and Pipe Maker’.

For future growth, the company is concentrating on import substitutes of cold drawn seamless pipes & tubes by making specific sizes, which has assured its presence in the market and helped reducing imports. Few months back, the company developed 3-Dimensional tubes, which is an import subsitute and plays a crucial role for 12 mtrs. and above long pipes. The company has also taken successful trials of square and rectangular tubes. Moreover, it has established a new phosphate coating exclusively for Alloy Steel, which in turn reduces the number of draws and thereby the cost of production.

For FY05, MSL registered a sales growth of 60% to Rs.28 cr. and NP increased by 140% to Rs.2.05 cr. resulting in an EPS of around Rs.4 on its equity of Rs.5.29 cr. It reported decent numbers for June qtr as well and is expected to post impressive numbers for Sept’05 qtr on the eve of a fall in steel prices. The future outlook for the company is very promising as demand is expected to rise substantially from the user industry due to strong industrial growth. For FY06, the company is estimated to clock a turnover of Rs.35 cr. and NP of Rs.3.50 cr. which works out to an EPS of Rs.7. As the share price has corrected sharply after hitting a high of Rs.69, investors are strongly recommended to buy at current levels. The scrip has the potential to double in 12~15 months.