Monday, June 29, 2009

Stock Idea: Man Industries

Man Industries (India) ltd. (Rs. 45.00)

BSE Code : 513269

TTM EPS : Rs. 9

Market Cap : 225 Cr.

Pmt Stake : 48 %

52W H/L : Rs. 84/22

P/E Ratio : 4.4x

Dividend : 30% (F.V.5/-)

Book Value : Rs. 69

Established in 1988 as an aluminium extruder, Man Industries India Ltd (MIIL) today is one of India's largest producers and exporter of submerged arc welded (SAW) pipes. Being led by dynamics personalities like Mr R.C. Mansukhani and Mr. J.C. Masukhani, MIIL is the flagship company of reputed MAN group which has diversified business interest in India, USA, UK and UAE. Within the last ten years, company has multiplied its production capacity 20x times, from 50,000 tonne in 1998 to 1 million tonne currently. It specializes in production of large diameter Longitudinally SAW pipes & Helically (Spirally) SAW pipes. LSAW line pipes are generally used in transportation of oil and natural gas in high temperature and pressure applications in refineries and petrochemical units apart from finding application in fertilizers and dredging industry. On the other hand HSAW pipes are used under low pressure condition for transportation of oil, water, sewerage, agriculture and in construction sector. Company has the capability to manufacture LSAW pipes with outer diameter ranging from 16~60 inches and wall thickness of 6~38 mm upto maximum pipe length of 12 mtrs. Whereas for HSAW it can make pipes having 16~84 inches of outer diameter upto maximum length of 18 mtrs. Infact it is the only company in India to manufacture 18 mtr long HSAW pipe and up to 30 mm thickness in X-70 grade steel. Besides manufacturing, MIIL also has the in-house processing facilities for all types of Anti-corrosion coating such as 3LPE, FBE, Internal Epoxy etc and cement mortar coatings. And among the recent developments MIIL has diversified into real estate & infrastructure development in a small scale thru a subsidiary "Man Infraprojects" and has also hived off the extrusion business into "Man Aluminum – a separate listed company. Financially, MIIL had raised around Rs 200 cr in May 2007 thru FCCB route to set up a plant in USA. But now as the company is not proceeding with that plan and also doesn't has any other major capex plan, it has decided to buyback the FCCB thru the unutilized amount and thru internal accruals. This will prevent the equity from huge dilution which would have been detrimental for the existing shareholders. Incidentally, due to high conversion price and adverse market sentiment, not a single bond has been converted into equity, despite the conversion price being revised downward couple of times. Importantly, promoters have increased their stake thru creeping acquisition as it stands to 48% against 44% a year back. Secondly, few days back they have also taken preferential allotment of 25 lac warrants to be converted into equity @ Rs 35 per share. With an expected EPS of Rs 11 and current book value of Rs 70, company is available fairly cheap at market cap of little over Rs 200 cr. Investors are strongly recommended to buy at current levels for 50% gain within a year.

Source: Internet (SmartInvestments)

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