Srikalahasthi pipes at current levels

Discussion in 'Ask A Query About Your Stock Picks And Portfolio' started by Ram Gopal Varma, Dec 15, 2015.

  1. Ram Gopal Varma

    Ram Gopal Varma New Member

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    Hello everyone thanks in advance
    I'm a big fan of your website and your research work
    Few months back I read article on Srikalahasti on this same websitepipes recommended at level around 320 rs and now it has exponentially drop to 236
    Should i buy it on it this level
     
  2. Srouta Mukherjee

    Srouta Mukherjee Well-Known Member

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    I was thinking same thing but reason for sharp fall is this:

    Electrosteel Castings to sell prized Chennai property
    Troubled steel maker Electrosteel Castings is raising money by selling its prized real estate property at Chennai Boat Club area for Rs 55 crore to a profitable group outfit Srikalahasthi Pipes.


    Electrosteel, whose group company Electrosteel Steel is country's first case of takeover of a sick unit by banks, plans to raise about Rs 280 crore through efforts like sale or lease of properties and some other means to ride over the crisis, sources said.


    Electrosteel makes ductile and cast iron pipes and provides related construction engineering service with a capacity of 2.8 lakh tonnes of pipes and 2.5 lakh tonnes of pig iron.

    Boat Club Road is the most costliest and coveted addresses in Chennai where the group owns around 9,180 sqft of office space, which has been valued at Rs 55 crore.


    The property came to Electrosteel on account of its acquisition of Shakti Pipes in early 80s, a cast iron pipe maker with a plant at Elavur near Chennai.


    The Elavur unit went on to emerge as the largest producer of cast iron spun pipes in India.


    In difficult times, such property has come in handy and the property would now be transferred to a group outfit Srikalahasthi Pipes, earlier known as Lanco Industries, which would use it for its head office cum guest house.


    Srikalahasthi Pipes is a profitable venture of the Electrosteel group, which holds 48.54% in its equity share capital.


    It earned a post tax profit of Rs 37 crore during the September quarter against Rs 18 crore a year back and recently approved capital investment of Rs 100 crore for expansion of its existing its blast furnace at its plant along Srikalahasthi-Tirupati road.


    With this deal, Srikalahasthi would be extending financial assistance to the group flagship worth Rs 280 crore over a period through renting out space, buying goods like pipes and fittings made by Electrosteel, conversion of coal into coke and similar such services.


    The development comes at a time when Electrosteel has been downgraded to CARE A to CARE AA- due to "deterioration in financial performance in FY15 and lack of clarity with respect to funds to be received out of coal block deallocation leading to moderation in debt coverage indicators and tight liquidity position".


    Even as its grapples with a difficult business environment, its troubled group outfit Electrosteel Steel is being taken over by the consortium of its lenders by acquiring 53.7% stake through conversion of debt to equity.


    http://www.dnaindia.com/money/report-electrosteel-castings-to-sell-prized-chennai-property-2155673

    So, it is unfortunate that group is seeking to destroy profit making company.
     
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  3. Srouta Mukherjee

    Srouta Mukherjee Well-Known Member

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    Srikalahasthi pipes is shooting up today. This means fears of siphoning of funds is not there or what?
     
  4. darth

    darth Active Member

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    Bargain hunting probably
     
  5. Srouta Mukherjee

    Srouta Mukherjee Well-Known Member

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    Srikalahasthi is shooting up again how it is possible when siphoning news is there?
     
  6. darth

    darth Active Member

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    Related party transactions need to pass the scrutiny of regultors. Maybe the transaction is at arms length and the siphoning news is manufactured and planted to benefit a few vested interests..... Just a thought for i know nothing about the transaction and financial health of the transacting parties
     
  7. Srouta Mukherjee

    Srouta Mukherjee Well-Known Member

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    Anything is possible in this World
    Srikalahasthi is highly profitable and Electrosteel is loss making concern.
    So it is dangerous situation for investors in Srikalahasthi IMHO
     
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  8. Srouta Mukherjee

    Srouta Mukherjee Well-Known Member

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    Srikalahasthi Pipes may hit Rs 350 in 6 months: SP Tulsian

    SP Tulsian of sptulsian.com is of the view that Srikalahasthi Pipes may test Rs 350 in six months and may even test Rs 400 in the next 12 months.

    SP Tulsian of sptulsian.com told CNBC-TV18, " Srikalahasthi Pipes makes the ductile iron pipes which are mainly used for the water supply. They have their plant closer to Tirupati and has recently bagged one order from Telangana Water Board for about Rs 850 crore in the month of December and the supply for that water project has already started. The total order inflow in the month of December alone is Rs 1,050 crore and that is going to be the very big growth driver for the company because Telangana Water Board is a Rs 37,000 crore project and that is going to get completed maybe in the next couple of years for which the international funding has come. It is their main business."

    "Recently, the company has completed Rs 100 crore expansion and they have taken up the second expansion of Rs 100 crore as well, which will increase the mini blast furnace capacity as well as for the low ash metallurgical coke capacity, matching capacity because that is a backward integration and that will eventually take the pipe making capacity to 2,85,000 tonne which is now at 2,20,000 tonne. So, maybe in the next six months, you will be seeing the capacity increase of maybe about 30 percent," he said.

    "The operating profit margin has jumped from 15 percent which was in FY15 to 21 percent in the first half of H1, FY16. If I just quantify that with the number, on the topline of Rs 555 crore in the first half against closer to Rs 1,100 crore, in the whole of FY15, the operating profit is at Rs 116 crore against Rs 155 crore for whole of FY15. That is the reason, the earnings per share (EPS) for the first half has been at Rs 18 against Rs 21 for FY15. So, I am expecting and always because of this supply of this Telangana having started, maybe the full FY16 will be having an EPS of closer to about Rs 38."

    "Going forward for FY17, I am expecting the company to post an EPS of Rs 45. If you go by the equity pattern and maybe the book value, it is closer to Rs 91, equity is about Rs 40 crore while net worth is Rs 365 crore. The debt which is there in the books is largely for the working capital, because we all know that these are all highly working capital intensive industries."

    "With promoter stake of 51 percent, high net worth individuals (HNI) and the bodies corporate are holding 35 percent, I see this stock quite having a good potential to move up from here. I am giving a target of Rs 350 in six months, but maybe one can look for a target of Rs 400 plus as well in the next 12 months," he added.

    Read more at: http://www.moneycontrol.com/news/stocks-views/srikalahasthi-pipes-may-hit-rs-3506-months-sp-tulsian_4892001.html
     
  9. Karthikeyan

    Karthikeyan Member

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    Sri Kalahasthi pipes may really do well. Will it be of any help to the investors? I am doubtful after the recent news, which made many suspect that this company's wealth is being used to bail out Electro steel castings. Still I can't understand why should Sri Kalahasthi Pipes shell out 55 crores for 9100 sq.feet property in Boat club Road, Chennai. In less than 1/4th of this amount, one can get a good office in Mount Road, Chennai, if at all such a property is really necessary in the first place.

    If Electro Steel Castings sells the said property to other interested parties, they may not get 55 crores.

    I don't know the current status regarding the purchase of the said property, as I stopped following it. I sold all my shares for a very small loss after the news surfaced.

    Despite of good potential, dubious intentions of management refrain me from considering this stock.

    There is a strong chance that I may be proven wrong. But those who purchase this stock may have to be prepared for sudden shocks.

    Opposing views are invited, as I am surprised as to why the price of this share has not fallen much, after the trouble some news.

    I may consider buying the shares of this company again, if my doubts abt the Management get clarified.
     
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  10. asharan83

    asharan83 New Member

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    Good luck Steel Tubes may also be looked at as alternative to Srikalahasti Pipes. D.D. Sharma had recommended this with target of 150 ( on CNBC Awaaz). Valuations are reasonable and order flows are expected to grow.
    Market Cap.:₹ 239.14 Cr.
    Current Price:₹ 108.70
    Book Value:₹ 90.76
    Stock P/E:7.25
    Dividend Yield:1.38%
    Face Value:₹ 2.00

    52 Week High/Low: ₹ 117.85 / ₹ 68.80
    PEG Ratio: 0.63
    Current ratio: 4.62
    Interest Coverage: ₹ 2.19
    PB X PE: 8.70
    NPM last year: 2.60%
    NPM latest quarter: 4.50%
    Return on equity: 16.98%
    Return on equity 5years growth: -5.22%
    Price to Sales: 0.23
    Sales: ₹ 1,021.95 Cr.
    Sales growth: -0.95%
    Profit growth: 78.70%
    Profit growth 3Years: 10.35%
    Net worth: ₹ 180.98 Cr.
    Return on invested capital: 17.60%
    Refer the following video (Hindi)


     
    Last edited: Jan 11, 2016
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  11. Biju

    Biju Member

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    There are so many Sharma's in visual media ( I donot mean Shankar Sharma who is a genious in my view) Many of the visual media analysts are like propaganda cum distribution agents
     
  12. Srouta Mukherjee

    Srouta Mukherjee Well-Known Member

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    Srikalahasthi Pipes plans ₹55-crore capex

    Srikalahasthi Pipes Ltd has begun a project to expand as well as create new facilities, at an investment of over ₹150 crore.

    The company’s board recently approved a capital expenditure of ₹55 crore to put up two units of ferro alloys of 9 MVA capacity each. In addition, a double wall corrugated (DWC) pipes manufacturing unit will be set up. All these new units will come up in the company’s 300 acre complex in Rachagunneri village, about 12 km from Srikalahasthi in Chittoor district of Andhra Pradesh.

    According to GS Rathi, Whole Time Director, the DWC pipe plant, with an investment of ₹25 crore, will meet the growing demand of pipes required for sewerage and drainage. It will be commissioned by March 2017.

    http://www.thehindubusinessline.com...-pipes-plans-55crore-capex/article8596763.ece
     
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