ISMT Ltd: A Brief Overview

ISMT Ltd is a leading Indian manufacturer of specialized seamless tubes. Founded in 1977, it caters to various industries, including automotive, bearing, oil and gas, hydraulics, and wind power. Their core expertise lies in producing seamless tubes with high precision and dimensional accuracy.

ISMT is among the largest seamless tubes manufacturers in India. It has tube manufacturing facilities in Ahmednagar and Baramati (Maharashtra) with a combined capacity of 3,71,000 metric tonnes per annum (MTPA)and steel-making facility in Jejuri (Maharashtra) with a capacity of 3,50,000 MTPA.

What are its products?

• Cold rolled and machined bearing rings: Used in various automotive and industrial applications.
• Cages for constant velocity (CV) joints: Crucial components in car axles.
• Swaged and machined axles for trucks: Essential for heavy-duty vehicles.
• API couplings: Used in oil and gas exploration and production.
• Honed tubes for cylinders: Key components in hydraulic and pneumatic systems.
• Gear blanks: Used in the manufacturing of gears.
• Piston pins, bushes, spacers: Various precision machined components for diverse industries.

Kirloskar Ferrous acquired the company in FY22 and the rationale mentioned are:

• Synergies and market expansion: Combining ISMT’s specialized seamless tube expertise with KFIL’s existing product portfolio and established distribution network will be able to expand their market reach and optimize resource utilization.
• Strengthening product offerings: Acquisition allowed KFIL to offer a wider range of high-value seamless tubes to their existing customers, catering to diverse industry needs.
• Technological advancement: Access to ISMT’s modern manufacturing facilities and R&D capabilities enhanced KFIL’s technological prowess and product development potential.
• Vertical integration: Owning both the seamless tube manufacturer (ISMT) and the alloy steel plant (ISSAL) gave KFIL greater control over raw material sourcing and cost optimization.
• Diversification: Expanding into the niche market for specialized seamless tubes reduced KFIL’s dependence on the volatile automotive sector and provided a more stable revenue stream.

What is unique to this company?

• Diversification: ISMT produces a wider range of specialized seamless tubes compared to most competitors, catering to diverse industry needs.
• Modernity: Their plants are equipped with state-of-the-art technology, ensuring high-quality production and efficiency.
• End-to-end solutions: They offer specialized teams that provide customized solutions to specific industry requirements.

Major Positives:

• Significant reduction in Bank Debt from 2000 Cr to 42 Crs in Sep 23’
• From -ve reserve of -1500 Cr to +ve reserve of 1400 Cr
• Credit Rating improved to A+
  (Ref: ICRA Limited)
• Large capex plans of ~Rs. 350-400crore in FY2024 (partly debt-funded) towards setting up a solar power plant, cost saving and efficiency improvement projects, debottlenecking activities and around Rs. 400 crores in FY2025(partly debt-funded) towards capacity expansion and cost saving projects
  Disclaimer: Invested

Hi,

No I havent done much research on the competition yet. This exercise was just to understand the company, business model and a possible angle for future growth. I came across it through my work. I havent yet personally invested because I’m still trying to value the potential of the company and when that exercise yields positive result i purchase almost immediately

3 more new stores by AVL total count to 138.

Sir, how can we possibly know if it is a shakeout or a fall, or the beginning of a fall, in real time? Only after the up move to the previous range, it is called a shakeout. Volume does not help either, with volume on the fall day is more than the previous days. How can we know that the price may come back when both the price and volume are significant?

I am sure you must have seen this many times, what can be done? Cut position if in loss even if SL is not yet hit, book partial profits if in profit, or stay put to see what happens the next day? Or check the news and see if the news justifies the fall?

And do you monitor your trades in real time, or keep alerts for price drops, or do you trail the profits and update the SLs?

Thank you.