Buy Maithan Alloys; target of Rs 200: Sunidhi Securities

“Maithan Alloys (MAL) anticipates that with an increasing power deficit, the country will soon be compelled to restrict the export of energy-intensive materials; its 72-MVA plant in the Visakhapatanam SEZ (in a subsidiary company) will insulate it from the downside of this anticipated action and enable it to widen its global user base. 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.”

“MAL is likely to post an EPS of Rs 45 in FY11 and Rs 54 in FY12. At the CMP of Rs 147, the share is trading at a P/E of 3.3x on FY11E and 2.7x on FY12E. We recommend BUY with a target of Rs 200 in the medium term,” says Sunidhi Securities research report.

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