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Buy Ratnamani Metals and Tubes; target of Rs 2000: Sharekhan

Sharekhan is bullish on Ratnamani Metals and Tubes has recommended buy rating on the stock with a target price of Rs 2000 in its research report dated August 10, 2022.

August 12, 2022 / 03:33 PM IST
 
 
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Sharekhan's research report on Ratnamani Metals and Tubes


Q1FY23 numbers were a mixed bag with a robust 85.7% y-o-y rise in revenues to Rs. 977 crore (7% above estimate), led by strong order execution and higher realisation. However, OPM of 13.4% (down 271 bps y-o-y) missed estimates by 260 bps due to an unfavourable product mix and RM cost pressure. Operating profit/PAT of Rs. 131 crore/Rs. 87 crore missed estimate by 10%/8%. Order book position stays robust and grew by 5.5% q-o-q to Rs. 2,345 crore with CS/SS mix at 69%/31%. RMTL has a strong order bid pipeline and new inquiries from Europe are rising amid geopolitical concerns. Management lowered FY23 revenue growth guidance to 20% (from 25% earlier) due to decline in steel price and is hopeful of exceeding growth guidance, led by strong Q1 revenues and a robust order book. It maintained EBITDA margin guidance of 15-18%.



Outlook


We maintain a Buy on RMTL with an unchanged PT of Rs. 2,000 (adjusted for bonus issue) given strong earnings growth outlook, strong RoE of 18% and robust balance sheet. Stock trades at 28x/23x its FY23E/FY24E EPS.

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Ratnamani Metals & Tubes - 110822 - khan

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first published: Aug 12, 2022 03:33 pm
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