Hold Adhunik Metaliks for long term: Betadpur

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Hold Adhunik Metaliks for long term: Betadpur

Hold Adhunik Metaliks for long term, says Satish Betadpur, MD of IIR Group.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See previous views by Satish Betadpur See what other Experts & Brokerages are saying about Adhunik Metalik See messages about Adhunik Metalik Adhunik Metalik BSE | NSE 30/05/12 Are Mutual Funds betting on Adhunik Metalik?

Hold Adhunik Metaliks for long term, says Satish Betadpur , MD of IIR Group.

Betadpur told CNBC-TV18, "Adhunik Metaliks is in three businesses. First is that they make steel, then they are into mining and they are into the power business. In the steel the story is all about backward integration. Their mines for iron ore and coal are already producing and they are going to backward integrate into making steel work, which is going to cause a substantial improvement in EBITDA margin. Whatever iron ore - they are not going to be using, they are going to be selling in the open market and so revenues and profits from them are also going to flow through."

He further added, "In addition they produce manganese, which they are going to sell in the open market. Now in addition to that we have power plant for which all clearances have come, coal linkages have also come in. This is a 540 megawatt plant in Jharkhand. So all of that added together, there is a huge boost in earnings in the upcoming years."

"Current year earnings were Rs 12 EPS, which is going to Rs 24 in fiscal year '12 and Rs 36 in fiscal year '13. So based on the current stock price, this stock is trading at around 10 times earnings, which will be less than five times earnings in the coming years by '12. So this stock is exceedingly cheap on an earnings basis and against comparables. So we clearly like the stock from a long-term holding and it is one of our clear picks in the midcap metals and mining space."

Disclosure: My clients and I may have personal holding in the above stock.