Purchase Ratnamani Metals and Tubes with a 3500 rupee goal: Sharekhan

 Purchase Ratnamani Metals and Tubes with a 3500 rupee goal: Sharekhan

In its research report dated October 03, 2023, Sharekhan, who is optimistic about Ratnamani Metals and Tubes, advised a buy recommendation on the company with a target price of Rs 3500.

Sharekhan's Ratnamani Metals and Tubes study report

Superior order execution and a 555 bps year-over-year improvement in margins drove a robust Q2 that resulted in a 66% year-over-year increase in consolidated PAT to Rs. 164 crore, 43% above forecast. The execution of a few outstanding orders and a favorable product mix drove the sharp increase in OPM. The order book is still substantial at Rs. 2975 crore. The projection for standalone revenue and EBITDA margin for FY24 was Rs. 4,500–5,000 crore/16–18%. Investing Rs. 350 crore in the CS/SS plant will power the subsequent phase of expansion. A joint venture with Technoenregy AG to open up new growth prospects.

Prospects

With a strong financial sheet and a leading domestic market share in steel tubes and pipes, it is well-positioned to take advantage of medium- to long-term development possibilities in the oil and gas and water supply sectors. As a result, we maintain our Buy rating at Rs. 3,500 with a reduced PT. At 31x/27x its FY25E/FY26E EPS, the stock is trading.