KRChoksey has recommended hold rating on Ratnamani Metals & Tubes with a target of Rs 148, in its research report.
"Ratnamani Metals & Tubes net sales were Rs 219.3 crore as compared to Rs 191 crore in the similar quarter last year. However the sequential performance of the company has been down by 32% on the back of lower volumes. The sales volumes of stainless steel pipes stood at 2368 MT down by 34% compared to Q4FY10, marginally up by 1% compared to similar quarter last year. The carbon steel pipes volumes stood at 27977 MT down by 46% sequentially and a growth of 64% compared to Q1FY10. Ratnamani Metals & Tubes has an appropriate mix in both the segments, stainless steel which enjoys higher margins whereas carbon steel enjoys higher volumes. The stainless segment will is set to benefit from huge investments expected in Indian power and refining sectors, while low gas pipeline penetration along with new discoveries in KG basin makes carbon steel pipe a huge business opportunity."
"At CMP of Rs 132, stock is trading at FY11E and FY12E P/E multiples of 6.6x and 6.1x, and an EV/EBITDA of 3.6x and 3x FY11E & FY12E respectively. We value the company at 4x FY11E EV/EBITDA, thus maintaining our price target of Rs 148 with an upside of 12%. Hence we recommend HOLD rating on the stock," KRChoksey research report.
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