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Buy Ratnamani Metals and Tube: target of Rs 2500: Sharekhan

Sharekhan is bullish on Ratnamani Metals and Tube has recommended buy rating on the stock with a target price of Rs 2500 in its research report dated December 03, 2021.

December 06, 2021 / 02:12 PM IST
 
 
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Sharekhan's research report on Ratnamani Metals and Tube


New order bookings grew by 2.3x y-o-y to Rs. 2,700 crore during April-Nov’21 and management sees monthly order execution of Rs. 250-300 crore. Thus, we believe that management is on track to achieve revenue growth guidance of 31% y-o-y for FY22. Large opportunities from oil & gas, CGD and water transportation sectors would result in annual order inflow of over Rs. 3,000 crore for next couple of years while ramp-up in utilisation of recently-expanded carbon steel/stainless steel capacity would take margin to historical average of 17-18%. Overall, we expect RMTL’s revenue/EBITDA/PAT to clock 24%/23%/21% CAGR over FY21-24E given potential improvement in order execution with likely pick-up in capex plan of domestic clients and higher export order with approval of RMTL’s new plants by international customers.



Outlook


Hence, we maintain a Buy on RMTL with an unchanged PT of Rs. 2,500 as RMTL’s dominant domestic position makes it key beneficiary of demand revival in steel tubes and pipes. Stock trades at 23.4x its FY2023E EPS and 19.7x its FY2024E EPS.

For all recommendations report, click here

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first published: Dec 6, 2021 02:12 pm

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