Metalman Indsutries - Rs. 33.00

Metalamam Industries Ltd (MIL) was incorporated in 1971 as private limited company to manufacture high frequency induction welded tubes and other specialised pipes. In 1986 it was converted into a public limited company and in 1996 it changed its name from Metalman Pipe Manufacturing Company Limited. Today, it is an ISO 9001:2000 manufacturer & exporter of CR Steel Sheets/Coils, CR Galvanised plain steel Sheets/Coils and Corrugated steel sheets. It also manufactures black and galvanised steel pipes, precision tubes and hollow sections and exports its products all over the world including China, USA, Japan France, Germany, UK, Europe, Brazil, South Africa, Philippines, Mauritius etc.

MIL can boast of one of the most ultra modern and hitech manufacturing plant spread across Pithampur, Dhar Dist and Sukliya Industrial Area, Indore. Its total current capacity is 2,75,000 TPA but due to raw material concerns, the company is working only at 40 per cent capacity utilisation. Recently, the company started to manufacture Mild Steel Plain HR Plates and Chequered plates. It also added a Mini Spangle and Tension leveling equipment to its Continuous Galvanizing Line, which will help in product applications such as colour coating. A few weeks ago, MIL completed backward integration by which its sister company, Soni Ispat Ltd., has set up a plant to manufacture 2,00,000 TPA of ingots needed as a raw material for HR products. MIL has also acquired on a long lease arrangement Bhanu Iron, which is adjacent to its plant and has the capacity to produce 6,00,000 TPA of HR steel. Hence, MIL now has fully integrated operations from ignots to HR to CR to galvanized sheets under its control. Going forward, MIL’s capacity utilisation is expected to improve from the current 40 per cent, now that raw material concerns have been addressed. This, in turn, will boost its topline and bottomline in coming quarters.

For the six months ending 30 Sept. 2004, it posted very impressive numbers with Net Sales rising 50 per cent to Rs134 cr. and NP increased in line by 55 per cent to Rs5.35 cr. recording a half yearly EPS of Rs 4.5. Its second half is expected to be much better given the new developments and initiatives taken by the management. The company also has huge reserves of around Rs50 cr. on its current equity of Rs11.72 cr. taking its book value to around Rs 45. With higher production and improvement in profit margin, the company can report Net Sales of Rs290 cr. and earn NP of Rs12.50 cr. resulting in an EPS of Rs11 in FY05. Currently, the share is trading very cheap and investors are strongly advised to buy . Although the promoters stake is only 28 per cent and the scrip is in ‘Z’ category, still it has the potential to double in year’s time and turn into a multibagger in the long run.