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Flat Products Equipments: Buy on declines
Sunday, June 10, 2007
Flat Products Equipments (India) Ltd., (FPEL) manufactures cold reduction mills, temper pass mills, aluminium strip foil mills, galvanising lines, stretch levelling lines and corrugating machines. Its manufacturing facilities are located at Taloja and Bhandup in Mumbai and at Silvassa and Dadra & Nagar Haveli. Tilak Raj Mehta is the chairman while Ravindra B. Shetye is the executive director and CEO of the company.
FPEL has over the years, grown into a multi-product, design, manufacturing and contracting company. It manufactures cold rolling mills and other downstream processing mills and related facilities like galvanising lines, tension lines, skin pass mills, mill automation equipments etc. for ferrous and non-ferrous industries and supplies its products to the steel industry.
In addition to building new equipments, it also undertakes complete revamp and modernisation of older mill equipments. The company has designing facilities and technology tie-ups with some overseas mill and processing line manufacturers like T.Sendizimir Inc.,Achenbach Buschutten GmbH, Bliss Salem Inc., Redex, Milley Engineering Company and Comstock-2 Inc. It also has technical collaboration with Durmech Engineering of UK, for manufacturing paint-coating lines.
Exports: The company's main thrust has been exports and it exports its products to China, Morocco, Turkey, Colombia, Nigeria, Bangladesh, Korea, Malaysia, Egypt, Kenya, Iran, Vietnam, Japan & Ethiopia. In 1996, it bagged a huge prestigious order from AL Ghurair Iron & Steel LLC, Dubai, for $33.05 mn. for export of machinery amidst stiff international competition.
Projects: During 2006-07, the company has completed some prestigious projects in India and abroad like Corpacero in Colombia worth $20.75 mn., Lotus Steel in Vietnam worth $13.57 mn., Tat Metal in Turkey $6.7 mn., Diamond Steel in UAE $8.25 mn., Mahan Semnan in Iran $20.6 mn. In the domestic market, it completed the Hi Tandem Cold Rolling Mill for Uttam Galva Steel Ltd., which was manufactured for the first time in India.
Orders: The company has orders on hand worth Rs.878 cr.
Performance: The company reported fascinating results for the year ended 31 March 2007 with a revenue of Rs.529.32 cr. with a net profit of Rs.15.83 cr. posting an EPS of Rs.32.05.
Financials: The company has a tiny equity base of Rs.4.94 cr. with a book value of Rs.138. For FY07, its net turnover rose by 79% while its PAT shot up by a mammoth 624% and exports increased by 62%.
Q4 Results: FPEL reported fabulous results for Q4FY07. On gross sales of Rs.248.24 cr., it clocked a net profit of Rs.12.18 cr. netting a record basic/diluted EPS of Rs.24.67 for the quarter. Its annualized EPS works out to Rs.98.68.
Share Profile: The FPEL share with a face value of Rs.10 is listed and traded on the BSE under Indonext (S) segment. Its share price touched a 52-week high of Rs.350 and a low of Rs.69. At its current market price of Rs.303, it has a market capitalization of around Rs.152 cr.
Prospects: The buoyancy in the Indian economy as a whole and the capex plans in the steel industry in particular augurs well for producers like FPEL. Since, the steel industry is on a major expansion drive, FPEL will witness strong growth. The continuing revival in industrial production together with the government’s focus on infrastructure development would spur economic growth.
The upbeat outlook of the global economy will provide a further boost as the company’s focus is on exports and it envisages significant business potential from several developing countries that are enhancing their infrastructure. Due to its unique strengths, FPEL is well positioned to cash in on the export business as the quality of large projects established by it are very well accepted in the global steel processing industry.
Conclusion: FPEL is primarily engaged in the manufacture of capital goods for the metal processing industry. Currently, the capital goods industry is the flavour of the season on the bourses and the shares of such companies are eagerly lapped up by marketmen for quick and profitable gains.
At the current market price of Rs.303 the FPEL share is discounted less than 10 times its 2006-07 earnings against the industry average P/E multiple of 20. If the latest quarterly earnings are anything to go by, the company is likely to post robust results in days to come. Following the announcement of empowering performance for Q4, its share price rose sharply. Exposure may be contemplated in the counter on any weakness. Enterprising investors, however, may take a shot at the counter for good appreciation in the medium to long-term.
FPEL has over the years, grown into a multi-product, design, manufacturing and contracting company. It manufactures cold rolling mills and other downstream processing mills and related facilities like galvanising lines, tension lines, skin pass mills, mill automation equipments etc. for ferrous and non-ferrous industries and supplies its products to the steel industry.
In addition to building new equipments, it also undertakes complete revamp and modernisation of older mill equipments. The company has designing facilities and technology tie-ups with some overseas mill and processing line manufacturers like T.Sendizimir Inc.,Achenbach Buschutten GmbH, Bliss Salem Inc., Redex, Milley Engineering Company and Comstock-2 Inc. It also has technical collaboration with Durmech Engineering of UK, for manufacturing paint-coating lines.
Exports: The company's main thrust has been exports and it exports its products to China, Morocco, Turkey, Colombia, Nigeria, Bangladesh, Korea, Malaysia, Egypt, Kenya, Iran, Vietnam, Japan & Ethiopia. In 1996, it bagged a huge prestigious order from AL Ghurair Iron & Steel LLC, Dubai, for $33.05 mn. for export of machinery amidst stiff international competition.
Projects: During 2006-07, the company has completed some prestigious projects in India and abroad like Corpacero in Colombia worth $20.75 mn., Lotus Steel in Vietnam worth $13.57 mn., Tat Metal in Turkey $6.7 mn., Diamond Steel in UAE $8.25 mn., Mahan Semnan in Iran $20.6 mn. In the domestic market, it completed the Hi Tandem Cold Rolling Mill for Uttam Galva Steel Ltd., which was manufactured for the first time in India.
Orders: The company has orders on hand worth Rs.878 cr.
Performance: The company reported fascinating results for the year ended 31 March 2007 with a revenue of Rs.529.32 cr. with a net profit of Rs.15.83 cr. posting an EPS of Rs.32.05.
Financials: The company has a tiny equity base of Rs.4.94 cr. with a book value of Rs.138. For FY07, its net turnover rose by 79% while its PAT shot up by a mammoth 624% and exports increased by 62%.
Q4 Results: FPEL reported fabulous results for Q4FY07. On gross sales of Rs.248.24 cr., it clocked a net profit of Rs.12.18 cr. netting a record basic/diluted EPS of Rs.24.67 for the quarter. Its annualized EPS works out to Rs.98.68.
Share Profile: The FPEL share with a face value of Rs.10 is listed and traded on the BSE under Indonext (S) segment. Its share price touched a 52-week high of Rs.350 and a low of Rs.69. At its current market price of Rs.303, it has a market capitalization of around Rs.152 cr.
Prospects: The buoyancy in the Indian economy as a whole and the capex plans in the steel industry in particular augurs well for producers like FPEL. Since, the steel industry is on a major expansion drive, FPEL will witness strong growth. The continuing revival in industrial production together with the government’s focus on infrastructure development would spur economic growth.
The upbeat outlook of the global economy will provide a further boost as the company’s focus is on exports and it envisages significant business potential from several developing countries that are enhancing their infrastructure. Due to its unique strengths, FPEL is well positioned to cash in on the export business as the quality of large projects established by it are very well accepted in the global steel processing industry.
Conclusion: FPEL is primarily engaged in the manufacture of capital goods for the metal processing industry. Currently, the capital goods industry is the flavour of the season on the bourses and the shares of such companies are eagerly lapped up by marketmen for quick and profitable gains.
At the current market price of Rs.303 the FPEL share is discounted less than 10 times its 2006-07 earnings against the industry average P/E multiple of 20. If the latest quarterly earnings are anything to go by, the company is likely to post robust results in days to come. Following the announcement of empowering performance for Q4, its share price rose sharply. Exposure may be contemplated in the counter on any weakness. Enterprising investors, however, may take a shot at the counter for good appreciation in the medium to long-term.
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Investment in equity shares has its own risks. Sincere efforts have been made to present the right investment perspective.The information contained herein is based on analysis and up on sources that we consider reliable. I, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and I am not responsible for any loss incurred based upon it.& take no responsibility whatsoever for any financial profits or loss which may arise from the recommendations given in this blog.
