ISMT can give 40-50% appreciation in one year

Neeraj Deewan, Director Of Quantum Securities is of the view that ISMT can give 40-50% appreciation in the next one year.

Deewan told CNBC-TV18, “We have been bullish on the tube and pipe sector for quite some time. One of them being ISMT. ISMT is the largest integrated manufacturer of specialized seamless tubes. This has a very diversified product portfolio. It caters to different industries like oil and gas, boilers, power sector, auto ancillary, capital goods and engineering and most of these are very buoyant end user industry. They are doing very well and most of these industries are growing at a very good rate as such."

He further added, "Even this company ISMT being fully integrated they have their own steel billet manufacturing unit. They are expanding their capacity by 3 times in the next 1-1.5 year, from 1.55 tonne they are taking their capacity to 4.75 metric tonnes per annum.  Most of the expansion that the company has planned is through internal accruals so there will not be much too much burden on the company going ahead plus the company has even retained lot of its high cost debt. The company is making a good cash profit which for this year should be around Rs 170 crore kind of cash profit. The share as such is trading at 5.5 times our expected 08 earnings which is quite attractive and we are looking at an appreciation of about 40-50% in the next one year.”