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Turns ex-bonus today…

About the stock: Ratnamani Metals & Tubes (RMTL) is a niche player with superior capabilities in the domestic industrial pipes and tube segment. RMTL manufactures a wide range of stainless steel and carbon steel pipes & tubes, which find application in key end user industries like oil & gas refineries, power, healthcare, etc.

* Ratnamani Metals and Tubes (RMTL) has an impressive capital allocation strategy and best in class operating margins and return ratios

* RMTL has healthy cash flow and strong balance-sheet. It is one of the few players in the steel pipe sector having net cash position on its balance-sheet

Turns ex-bonus on June 30

* The company made an announcement of bonus share on May 18, 2022. The ratio was one bonus share for every two equity shares held, i.e, 1:2. The record date for the same is July 1, 2022 while the ex-date for the same is June 30, 2022 (today). Consequently, Ratnamani Metals and Tubes (RMTL) share price has been adjusted to opening price of | 1681/share from closing price of | 2521/share yesterday. Accordingly, our target price has also been revised to | 1967/share post this corporate action. We have valued Ratnamani Metals and Tubes at 25x FY24E EPS of | 78.7. We maintain our BUY rating on the stock

Key triggers for future price performance:

* Order book as on May 1, 2022 was at | 2223 crore (| 1912 crore as on February 1, 2022). As on May 1, 2022, stainless steel (SS) order book was at | 650 crore (| 666 crore as on February 1, 2022) while carbon steel (CS) orders were at | 1573 crore (| 1246 crore as on February 1, 2022)

* Over FY22-24E, we expect the topline to grow at a CAGR of 19% while EBITDA, PAT are expected to register CAGR of 26%, 31%, respectively

Rating Rationale

ICICI Direct endeavors to provide objective opinions and recommendations. ICICI Direct assigns ratings to its stocks according -to their notional target price vs. current market price and then categorizes them as Buy, Hold, Reduce and Sell. The performance horizon is two years unless specified and the notional target price is defined as the analysts' valuation for a stock

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