Buy Man Industries Ltd For Target Rs.480 By Choice Broking Ltd
Positive Investment Thesis in Place
We maintain our BUY rating on Man Industries Ltd (MAN) with a target price of INR 480/share as we factor in 1) Capacity addition at Jammu (20 KT Stainless Steel pipes facility at an outlay of INR 5.9Bn) and at Saudi (300 KT H-Saw Pipes facility at an outlay of INR 6.3Bn), 2) Revenue/EBITDA CAGR of 22/28% over FY25-28E driven by order book of INR 32Bn and bid pipeline of INR 150Bn, 3) Cash inflow from Navi Mumbai land parcel monetisation of ~INR 7.5Bn (~25% of current Mkt. Cap) spread over the next 5-6 years, 4) EBITDA margin expansion of ~143bps over FY25-28E driven by increasing share of value added products and operating leverage benefits of higher capacity utilization at the current plants.
Valuation: We arrive at a 1 year forward TP of INR 480/share for MAN. We now value MAN on our EV/CE framework where we assign an EV/CE multiple of 1.35/ 1.35x for FY27E/ 28E, which we believe is conservative given strong ROCE even under reasonable assumptions. This valuation framework gives us the flexibility to assign a commensurate valuation multiple basis an objective assessment of the quantifiable forecast financial performance of the company. We do a sanity check of our EV/CE TP on implied EV/EBITDA, P/BV, and P/E multiples. On our TP of INR 480 FY27E implied EVEBITDA/PB/PE multiples are 7.9x/1.4x/11.8x
Risks: Slow down in conversion of bid pipeline into order book and slow ramp up of upcoming capacities are risks to our BUY rating.
Q1FY26 Review: Revenue miss but margins improved (Consolidated)
* Consol Revenue / EBITDA / PAT came in at INR 7,421Mn ((0.9)/(39.1)% YoY/QoQ) / INR 491Mn (+30.0/(59.5)% YoY/QoQ) / INR 276Mn (+44.9/(59.5)% YoY/QoQ) vs. Choice Institutional Equities (CIE) of INR 8,236/ 741/ 305 Mn respectively.
* GP/EBITDA/PAT margins improved by 357.7/157.3/117.6bps YoY to 20.5/6.6/3.7%.
* Current order book stands at INR 32Bn while the bid pipe line is healthy at ~INR 150Bn.
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SEBI Registration no.: INZ 000160131
