Uni Abex Alloy Products Ltd - 115.00 Rs

Incorporated in 1972 and belonging to professional Neterwala group, Uni Abex Alloy Products Ltd (UAAP) is a pioneer in alloy steel casting. It produces static, centrifugal castings and assemblies in heat, wear and corrosion resistant alloys. It supplies majority of its products to core sector industries like petroleum, petrochemical, fertilizer, iron & steel, manufacturers of decanters, valves, heat-treatment plants, galvanizing plants and engineering industries. Its product range includes reformer tubes, catalyst tubes, air injection tubes, radiant tubes, harp assemblies, bowl cylinders, glendon coils, sink rolls etc. UAAP is one of the major suppliers of decanter components to Alfa Level, which is also its biggest client. On the international front, company has been exporting to USA, France, Germany, Denmark, Japan, Italy, China and Canada.

Located at Thane-Mumbai and having a production capacity of 1500 tons, UAAP’s manufacturing plant is equipped with modern manufacturing & testing facilities. Earlier it had technical collaboration with Abex Corporation, USA and with SCHMIDT Clemens, Germany in development of heat, corrosion and wear resistant alloys for various industrial applications. While company has mastered the manufacturing skill from its technology partners, it has its own in-house R&D department as well, which helps it develop new products for its clients. Notably, UAAP is an approved manufacturer of reformer/catalyst tubes by Engineers India Ltd and is also considered as a premier source for high nickel and chromium alloys. It is among the few to have the process capability to manufacture static castings up to 1000 kgs single piece, horizontal centrifugal castings of 75-650 mm diameter & 6000mm length and vertical centrifugal castings upto 1200 mm diameter and 1000 mm length. Last year it developed TX-63 for air injector tube for high temperature application upto 1010°C.

On the back of strong industrial growth, UAAP is augmenting the existing capability and capacity through capital investment in new plant and machinery and through expanding/developing its sub-contractor/vendor network. It intends to take its capacity to 2000 tons in phased manner by 2008. UAAP also wanted to enter a joint venture with EU company for manufacturing reformer tubes. But nothing has been materialized till now. Meanwhile it will continue to concentrate on lucrative export market and is expected to derive nearly 50% revenue from it in FY08. Considering the healthy order book position, encouraging Q1FY08 nos and assuming an operating margin of approx 13%, company is expected to end FY08 with sales of 75 cr and NP of 5.50 cr. This works out to an EPS of 28 Rs on a tiny equity of 1.98 cr. At a reasonable discounting by 7x times, scrip has the potential to touch 200 mark (i.e. 75% return) in 12~15 months. However, the rising cost of inputs like nickel, ferro alloys and steel scrap and fluctuations in Euro and US $ exchange rate may have negative impact on margins.