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Maharashtra Seamless Target - | 430
• Maharashtra Seamless (MSL) is a leading manufacturer of
seamless and ERW pipes in India. In addition to the large diameter
seamless pipe plant, MSL also manufactures higher value-added
products, such as drill pipes used in the oil & gas sector
• The company is likely to be a key beneficiary of the imposition of
safeguard duty on import of seamless pipe and tubes. The central
government has imposed a safeguard duty on imported seamless
pipes and tubes which is as follows: a) 20% duty ad valorem
when imported during August 13, 2014 to August 12, 2015, b)
10% duty ad valorem when imported during August 13, 2015 to
August 12, 2016 and c) 5% duty ad valorem when imported
during August 13, 2016 to February 12, 2017. This move is likely
to aid Maharashtra Seamless in augmenting its sales realisations
in the domestic market. Furthermore, the sales volume is also
likely to witness healthy traction, going forward
• Going forward, we expect an improvement in capacity utilisation
levels and realisations. We have assumed blended EBITDA/tonne
to increase from | 3551/tonne in FY14 to | 6350/tonne in FY15E
and further to | 9163/tonne in FY16E. We have valued the
company at 6x FY16E EV/EBITDA and arrived at a target price of
| 430 with a long term (18-24 months) investment horizon.
Maharashtra Seamless has a strong balance sheet, healthy cash
flow and net cash status, which augur well for the company
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
��
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Maharashtra Seamless Target - | 430
• Maharashtra Seamless (MSL) is a leading manufacturer of
seamless and ERW pipes in India. In addition to the large diameter
seamless pipe plant, MSL also manufactures higher value-added
products, such as drill pipes used in the oil & gas sector
• The company is likely to be a key beneficiary of the imposition of
safeguard duty on import of seamless pipe and tubes. The central
government has imposed a safeguard duty on imported seamless
pipes and tubes which is as follows: a) 20% duty ad valorem
when imported during August 13, 2014 to August 12, 2015, b)
10% duty ad valorem when imported during August 13, 2015 to
August 12, 2016 and c) 5% duty ad valorem when imported
during August 13, 2016 to February 12, 2017. This move is likely
to aid Maharashtra Seamless in augmenting its sales realisations
in the domestic market. Furthermore, the sales volume is also
likely to witness healthy traction, going forward
• Going forward, we expect an improvement in capacity utilisation
levels and realisations. We have assumed blended EBITDA/tonne
to increase from | 3551/tonne in FY14 to | 6350/tonne in FY15E
and further to | 9163/tonne in FY16E. We have valued the
company at 6x FY16E EV/EBITDA and arrived at a target price of
| 430 with a long term (18-24 months) investment horizon.
Maharashtra Seamless has a strong balance sheet, healthy cash
flow and net cash status, which augur well for the company
�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��
��
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