From what I’ve read so far looks like a good move… Here is the hypothesis
Arjas has a capacity of 3L tons ( including Modern steel plant in Mandi gobindgarh ~4L tons)
a) Profitability perspective: Per a CRISIL report they did a PAT of 200cr on a topline of 1500 cr in 2021…Assuming normalization of the steel cycle on the company disclosed topline of 2800cr they should be doing 200-300 cr of PAT.
b)Valuation based on capacity: VSSL a close competitor has a capacity of 1.75 L tons and a mcap of ~2000 cr so by that logic also the price seems fair
Future expansion: Based on news articles Arjas is planning an expansion at both existing plants to take new capacity to 5.5 L ( which should translate into a topline of 5500cr in 1-2 years)
However all of the above is conjectural and very outside in. Will wait for the management to share more details.
Disc: Invested and super biased
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