Rama Steel Tubes
FY18 sales were Rs.340 crores. FY19 9 months sales have been Rs.290 crores. If the same trend is maintained can expect full year sales to be around Rs.400 crores with net profit around Rs.6 crores. This is a net profit margin of about 2%. EPS will be around Rs.2.76. PE is around 40. Growth in sales and profits has been poor so far. FY16 sales were Rs.243 crores with net profit of Rs.6 crores. This points to sliding margins. EBIDTA (consolidated) was Rs.27.27 crores in FY18 vs 23.70 in FY17. Interest costs have gone up sharply in December 18 quarter probably because of loans taken for expansion. Company is expanding capacity. In their latest FY18 annual repport (AR), the company mentions capacity as under on page 5.
Capacities are as below. (From AR)
Sahibabad UP 60,000 MTPA
Anantpur UP 36,000 MTPA
Khopoli, Maharashtra 72,000 MTPA
Total capacity 168,000 MTPA
and 60% Capacity utilization.
In FY18 production was 79,175.93 MTPA as against 61,108.44 MTPA in FY17, according to the FY18 AR.
The Company plans to expand it by 70,000 MTPA in FY2018-19. (Source FY18 AR).
The company has 300 employees.
if Post expansion capacity is assumed to be 238,000 MTPA, the market cap of Rs.194 crores seems rather high because per 1000 MTPA it comes to Rs.85 lakhs.
Some news stories about their expansion from 2016 and 2018:
Expanding capacity at Khopoli from 72,000 tpa to 1,32,000 tpa.
https://www.projectstoday.com/News/Rama-Steel-Tubes-begins-expansion-project-at-Khopoli
(June 2018)
Rama Steel Tubes has a total production capacity of 99,000 tonnes which the company plans to increase to 340,000 tonnes by 2019-20 at an investment of Rs 50 crore
(excluding land value).
(May 18, 2016)
This article mentions possibility of margin expansion. However margins have been declining and sales growth has been slow.
Rama Steel Tubes and Riddhi Steel Tubes are quite similar in terms of their size and financials. Both seem to be family run companies. Rama Steel Tubes have Naresh Kumar Bansal as the Chairman and MD and Richi Bansal (Son of Naresh Kumar Bansal) as the CEO. That apart, they have several decades of related experience.
Rama Steel Tubes FY18 annual report:
From their annual report:
It is one of the leading manufacturers of Steel Pipes & Tubes, G.I. Pipes in India. The product portfolio spans across pipes and tubes including galvanized tubes, ERW black steel pipes & tubes, scaffolding pipes & tubes, structural steel products and hollow sections. Its MS ERW black pipes vary from 15mm to 200mm in diameter and confirm to IS: 1239, IS:1161, IS:3589, IS:3601, & IS:4270.The Company’s G.I. Pipes range from 15mm to 150mm NB in light, medium and heavy sizes. Its product range effectively caters to the ever growing needs of different sectors including automobiles, infrastructure, real estate and furniture.
At the end of March 31, 2018, the Company’s balance sheet position was robust with 50% increase in networth at 78.74 crores. The Company’s total debt stood at Rs.60.24
crore with debt/equity ratio of 0.76 times. The working capital stood at Rs.51.28 crore with working capital cycle days of 48 days as against 45 days in the previous year.
Equity dilution:
The Company has issued 7,60,000 Equity Shares of `5/- each
pursuant to Conversion of 7,60,000 fully convertible warrants
issued preferential basis to the persons belonging to promoter
category.
Consequently the issued, subscribed and paid-up equity share
capital has increased from 8,01,70,000 divided into 1,60,34,000 Equity shares of5/- each to 8,39,70,000 divided into 1,67,94,000 Equity shares of5/- each.
FULLY CONVERTIBLE WARRANTS
The Company has issued 15,00,000 fully convertible warrants on
preferential basis to the persons belonging to promoter category
in year 2016-17, out of them 7,60,000 fully convertible warrants
were converted into equivalent number of equity Equity shares
of `5/- each in 2017-18.
During the Financial year 2017-18, Company has issued 7,60,000 equity shares of `5 each to persons belonging to Promoters Category pursuant to conversion of 7,60,000 Fully Convertible Warrants out of 15,00,000 Fully Convertible. Warrants issued and allotted during the year 2016-17.
This seems a good sign because the price for conversion was Rs.122 per share.
The company’s net foreign exchange outgo was about Rs.40 crores in FY18.
The top ten shareholders list saw an a change in shareholding of these names in FY18.
PRINCIPAL TRUSTEE COMPANY PVT LTD
A/C PRINCIPAL MUTUAL FUND - PRINCIPAL
FOCUSED MULTICAP FUND
144,000 shares added.
BHARTI AXA LIFE INSURANCE COMPANYLTD
118000 shares added
AXIS BANK LIMITED
109941 shares held.
MOTILAL OSWAL SECURITIES LTD
Reduced holding from 135729 to 61784 shares.
See AR for complete list.
Cash flow (Consolidated)
Rs. 9.05 crores was cash generated from operations with PBT being Rs.18.44 crores in FY18.
FY17 had a negative cash flow. (Rs.6.98 crores) with PBT being Rs.13.12 crores.
Company has been investing in expansion by selling investment property and issuing warrants to promoters for last two years.
They have taken loans from Richi Bansal and M/s Advance Hightech Agro Products Pvt. Ltd. adding up to close to Rs.1 crore. Mr. Naresh Kumar Bansal, his wife Kumud Bansal received rent of Rs.18 lakhs from the company.