Uttam Galva Steel - Rs.27.00

Incorporated in 1985, Uttam Galva Steels Limited (UGSL) is involved in the production of Cold Rolled Coils & Sheets (CRCS) and Galvanized coils & sheets (GCS). CRCS finds a very wide variety of applications, ranging from engineering automobiles, containers, general household items like shelves, cupboards and other steel furniture. GCS are use in roofing, side sheeting, ducting and other engineering applications. More than 70 per cent of its products are currently exported to over 103 countries with USA, Europe, China, Canada, Middle East, South East Asia and African countries as its focus areas. In the Indian market, the company is an established player for supply of CRC to most manufacturers of automobiles, white goods, general engineering, drums and barrels. It is also a large supplier of galvanized plain sheets as well as corrugated sheets to the construction industry and its Swan brand is well-known in the Western parts of rural India.With a modest beginning in 1988 with a Wet-Flux Galvanizing line in technical collaboration with M/s John Lysaght of B.H.P. Australia, UGSL has three modern galvanizing lines with a total capacity of 3,50,000 TPA today, the company has its own cold rolling facility with a capacity of 500,000 TPA. Balance of CR are converted to value-added grades in CRCs, cut to length sheets and also sold as Full Hard CR in overseas markets.

The company has also chalked out a Rs.250 cr. expansion plan for increasing the Cold Roll capacity by 4,00,000 TPA, expanding the Galvanising Line with a capacity of 3,50,000 TPA and to set up a most modern state- of-art pre-Painting line with a capacity of 60,000 MT. The Cold Rolling plant / Pre-painting line is expected to start commercial production by early 2005 and the galvanising plant is estimated to become operational from mid 2005. The promoters are also bringing in Rs.15 cr. by way of preferential allotment and diluting the equity by around Rs.10.40 cr.

For FY04, Net Sales was up 44 per cent to Rs.1162 cr. and NP has more than doubled to Rs.24 cr. Due to expansion and better price realisation, Q1FY05 sales increased by 68 per cent to Rs.528 cr. and NP was Rs.21 cr. in comparison to Rs.1.50 cr. in Q1FY04. Moreover, the company will save on interest cost this fiscal due to debt restructuring, which has brought down the average interest rate from 14 per cent to 7 per cent on Term Debts of Rs.295 cr. Keeping in mind the buoyancy in the steel sector and the company's expansion plans with major thrust on exports, it is estimated that the company will report Sales over Rs.2400 cr. and NP of Rs.110 cr. This would result in an EPS of Rs.14 on the expanded equity of Rs.79.96 cr. Investors can hope for 100 per cent appreciation in 12 months.