ICICI Direct is bullish on Ratnamani Metals and Tubes has recommended buy rating on the stock with a target price of Rs 1100 in its research report dated August 12, 2019.
ICICI Direct's research report on Ratnamani Metals and Tubes
Ratnamani Metals reported a steady set of Q1FY20 numbers wherein the topline came in marginally lower than our estimates while EBITDA, EBITDA margin and PAT came in higher than our estimate. Stainless sales volume was at 4576 tonnes (up 15% YoY) while carbon steel sales volume was at 46879 tonnes (down 34% YoY). Total operating income for the quarter was at Rs 587.7 crore (down 4% YoY), lower than our estimate of Rs 625.1 crore. The EBITDA margin was at 17.5% (up 260 bps YoY), higher our estimate of 14.8%. EBITDA margin came in highest in last 9 quarters. EBITDA for the quarter was at Rs 103.0 crore, up 14% YoY (higher than our estimate: Rs 92.9 crore). Ensuing PAT was at Rs 62.7 crore (up 9% YoY), higher than our estimate of Rs 57.9 crore.
We maintain our BUY recommendation on the stock. We remain positive on the overall demand prospects given significant investments planned by the government in the oil & gas sector, city gas distribution and water transportation boosting overall pipes demand (both stainless steel and carbon steel).
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