Ratnamani Metals & Tubes Initiating Coverage Report By Centrum Wealth

Ratnamani Metal and Tubes Ltd (Ratnamani) is the largest manufacturer and exporter of customized industrial steel pipes, commanding a market share of ~40% in the domestic stainless steel pipes market. We believe it is best suited to benefit from the revival in industrial capex cycle. Ratnamani’s structural growth story is expected to continue for the next two to three years, given an increase in spends in key industries like irrigation, oil & gas, nuclear and thermal power considering its expertise in manufacturing customized pipes. We estimate revenue and PAT CAGR of 24% and 27%, over FY2014-17E. We expect Ratnamani to maintain high margins on the back of good order-inflows in the stainless steel segment. At the current price, the stock trades at 10.8x FY2017E EPS of Rs62.4. We recommend BUY with a target price of Rs874.

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