Buy Maithan Alloys; target of Rs 140: Sunidhi Securities
Sunidhi Securities is bullish on Maithan Alloys (MAL) and has recommended buy rating on the stock with a target of Rs 140 in its October 08, 2012 research report.
October 09, 2012 / 14:21 IST
Sunidhi Securities is bullish on Maithan Alloys (MAL) and has recommended buy rating on the stock with a target of Rs 140 in its October 08, 2012 research report.
"Maithan Alloys (MAL), headquartered in West Bengal, MAL belonging to the Rs 1, 500 crore Maithan Group commenced commercial production of ferro manganese and silico manganese in 1997 with 10 MVA; it grew its capacity by 7.5 MVA in 2000 and 8.26 MVA in 2004 when the market for manganese alloys was weak, indicating the strong commitment to business. Currently, the capacity stands at 100 MVA at plants located near Asansol, West Bengal (49 MVA), Meghalaya (15 MVA) and Viskapatnam (36 MVA). The Kalyaneshwari unit is engaged in manufacturing manganese alloys (ferro and silico manganese) while the Meghalaya facility manufactures ferro silicon and silico manganese. The combined capacity is at 1, 75,600 tpa. MAL is India’s prime manufacturer and exporter of all three bulk ferro alloys – ferro silicon, ferro manganese and silico manganese.During Q1FY13, net profit has gone up by 14% to Rs 15.5 crore (Rs 13.7 crore) on 52% higher sales of Rs 196.5 crore (Rs 129.0 crore). Q1FY13 EPS works out to Rs 10.7 Vs Rs 9.4 in Q1FY12. During FY12, net profit fell by 35.0% to Rs 47.0 crore (Rs 72.8 crore) on 5.1% higher sales of Rs 624.9 crore (Rs 594.4 crore). EPS stood at Rs 32.2. A dividend of 20% (Rs 2.0/share) was paid.MAL’s subsidiary, Anjaney Alloys has successfully commissioned two furnaces of 18 MVA each of its 72 MVA capacity for manufacturing of Ferro-alloys and thereby has concluded the 1st phase of the project. The plant is located at Andhra Pradesh Special Economic Zone at Atchutapuram (near Vishakhapatnam) in the state of Andhra Pradesh. The 2nd phase of the project of setting up another two furnaces of 18 MVA each for manufacturing of Ferro-alloys is scheduled to be completed in the 3rd quarter of FY13.MAL is leveraging its unique positioning as India’s only major manufacturer of ferro manganese, silico manganese and ferro silicon to access a larger number of markets. MAL is strengthening capacity utilisation and with several operational measures it has undertaken, it expects to remain relevant across all market and product cycles. Due to increased steel production, the demand for manganese ore and ferro alloys has increased. However, with steel production projected to increase, a large gap between manganese alloys availability and requirement is foreseen. There requirement of ferro alloys to cater to the need of projected steel production will be 1.90 million tonnes by 2020 whereas prevailing ferro alloy production in India is 0.75 million tonnes. Modern constructions like glass and steel buildings require quality stainless steel with high manganese content. An increasing number of Indian railway wagons are made with stainless steel. Around 10 kg of manganese is required to produce one tonne of mild steel whereas 100-150 kg is required in one tonne of special steel. Thus prospects for MAL are bright in the long term. At the CMP of Rs 105, the share is trading at a P/E of 2.6x on FY13E and 2.2x on FY14E. We recommend BUY with a target price of Rs 140 in the medium-to-short term," says Sunidhi Securities research report.Public holding more than 90% in Indian cos Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.To read the full report click on the attachment 
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