Posted by:  sbalu on ( 06-Jun-07 16:28 ) | Rating  | | Price : BSE: Rs 51.05 ( -4.93 % ), NSE: Rs. 51.20 ( -4.83 % ) |
E.Clientele
The Company has already signed MoUs for product off-take with 20+ leading vendors of auto-comp OEMs. To name a few Telco, SKF Bearings Ltd., FAG Bearings India Ltd, Mico, Sundaram Fasteners Ltd., Siemens India Ltd., Hindalco Inds. Ltd, Cummins India Ltd and Ashok Leyland are its clients. AS the company moves towards the specialized steel bracket, it plans MOU with leading automobile manufacturers like M&M and Tata Motors.
Concerns
Interest Cost: Out of the total capex of Rs.437crs, the company has Rs.277crs worth of long-term loans. With the interest cost going up, the interest cost for the company will go up which inturn will impact the bottomline of the company.
Delay in planned expansion: Phase I of the company’s expansion was well on track. But the major expansions are yet to come in the phase II. Any delay in the proposed expansion will lead to changes in the company’s financial and operational health.
Weak demand/oversupply leading to fall in steel prices: Any weakness in alloy steel and steel product prices which may be triggered by a lull in demand for alloy steel products or an oversupply situation may depress realizations and therefore the topline.
Outlook & Recommendation
The company targets a topline of Rs.800crs for FY07 and a bottomline of Rs.70crs. Going by the company estimates, it presently trades at 5x its FY07 (E) earnings. The company’s margins will improve post the Phase II expansion that will see the bottomline growing faster than the topline.
Profile
Adhunik Metaliks Ltd, incorporated in 2001, is a part of Adhunik group and was founded by the late Mahadeo Prasad Agarwal. Its current product portfolio includes sponge iron, pig iron and alloy billets. The group has its focus on Eastern India primarily on account of access to high quality raw materials and stands amongst the largest business houses in eastern India. With an integrated business model from Iron ore to finished products, the group caters to the requirement of Automobile, Construction and Engineering
Upcoming projects for the company
Facilities Uses/Benefits
Capacity Expansion
Alloy Steel Making Enhancement to 330000TPA
Stainless Steel making New capacity of 0.12mn TPA
Vacuum Degassing Manufacturing clean specialty steel Billet/Bloom conditioning
To achieve desired reduction ratio as required in Auto and Bearing Steel and able to cater to niche Market.
Backward Integration
Mines (Iron Ore & Coal)
100% of Iron ore and Coal mined will be captively Consumed in DRI & Blast furnace.
Power Plant (17MW) Based on Coal Midlings from coal washery, for captive consumption,
resulting in increase in energy self generation from 30% to 60%.
Cost Reduction
Private Railway Sliding
For logistic Management for incoming and outgoing materials.
Safe Harbor Statement:
Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.
Nothing in this article is, or should be construed as, investment advice.
With thanks,
-sbalu
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