Gontermann Peipers (India) - Rs.38.00

Established in 1966, Gontermann-Peipers (India) Ltd. (GPIL) was promoted in technical and financial collaboration with Gontermann-Peipers GmbH-Germany, a front-ranker in the manufacture of rolls since 1825. In 1981, the company was taken over by the Ispat Group and has since grown by leaps and bounds. It is the leading producer of cast iron rolls and forged rolls commanding a major share of the domestic market. On the export front, its products are widely appreciated in Japan, USA, Canada, China, South Africa, Taiwan, South Korea, Thailand, Indonesia and 25 other countries. This flourishing export market has enabled GPIL to receive the EEPC Excellence Award for Excellence for 6 consecutive years for being the highest exporter of rolling mill rolls from India.

GPIL’s plant is located in West Bengal with an installed capacity of 12,000 MT of cast rolls and 3300 MT of forged rolls. For FY06, it produced 9406 MT of cast roll and 1793 MT of forged roll representing a capacity utilization of 80% and 55% respectively. As India's roll production capacity is more than its captive demand, GPIL is focusing on the international market and has recently established new export markets in Italy, Spain, Malaysia and Indonesia. Moreover, China, South East Asia, Europe, USA & Africa are being intensively scanned to ramp up the export volumes. Considering the future trend of the business, GPIL has given special thrust to new product development i.e. enhanced carbide rolls in ICDP segment. Besides, the development of high speed steel rolls is under trial. In view of the market potential and the growth of the steel industry, GPIL has drawn up an expansion-cum-modernization plan of Rs.40 cr. to enhance production capacity and produce value added rolls for the Steel industry. On completion of the project by Dec.’07, it will have an annual production capacity of about 18000 MT finished rolls.

Rolls’ being integral to steel production, the demand is directly linked to the growth of the steel industry. With reputed global steel manufacturers planning entry into the Indian steel market as well as aggressive expansion by domestic steel majors, the rise in the demand for rolls is fairly evident. In FY06, GPIL made a decent turnaround with sales improving by 40% to Rs.122 cr. and registering net profit of Rs.3.80 cr. compared to net loss of Rs.1.50 cr. in FY05. Maintaining the trend, it reported terrific numbers for the Sept’06 quarter. For H1FY07, sales grew by 15% to Rs.66 cr. whereas net profit shot up 50% to Rs.4.60 cr. in spite of higher tax provisioning of Rs.2.55 cr. On an annualised basis, it can clock a turnover of Rs.145 cr. with profit of Rs.9.50 cr. i.e. an EPS of Rs.7 on an equity of Rs.13.90 cr. For FY08, it can even report an EPS of Rs.10. Hence investors are advised to accumulate this scrip at sharp declines with a price target of Rs.55 (40% returns) in 15-18 months.