Buy Man Industries Ltd for the Target Rs.690 by Choice Institutional Equities
Business Overview:
Man Industries (MAN) is a leading manufacturer of large-diameter pipes with over three decades of operating experience across LSAW, HSAW, ERW pipes, and coating solutions. The company has strengthened its growth profile through the acquisition of National Pipe Company in Saudi Arabia for INR ~10 Bn and maintains a strong global footprint, with exports contributing ~80% of consolidated revenue. Supported by a INR 30.0 Bn order book, ~INR 160 Bn bid pipeline, and ongoing capacity expansion, we forecast Revenue/EBITDA/PAT CAGR of 31.0/40.9/65.7% over FY26–29E
Can MAN Sustain Growth Momentum Through Capacity Expansion and Strategic Initiatives?
Beyond its core LSAW, HSAW, and ERW pipe operations, we remain constructive on MAN, driven by key structural growth catalysts. The company is undertaking meaningful capacity expansion, including a 22 KTPA stainless steel pipe facility in Jammu (project cost: INR ~5.8 Bn). Further, MAN has acquired National Pipe Company (NPC) in Saudi Arabia for INR ~10 Bn. NPC carries an installed capacity of 430 KTPA (250 KTPA HSAW and 180 KTPA LSAW pipes) along with an order book of USD 120 Mn (INR ~11.4 Bn). Post acquisition, MAN’s total pipe capacity has expanded to 1.6 MTPA from 1.2 MTPA by end of FY26. Additionally, Monetisation of Navi Mumbai land parcel is likely to generate INR 8–9 Bn in cash inflow in the next 3–5 years, equivalent to ~20% of the market cap, strengthening liquidity and funding growth capex. We forecast ~301 bps EBITDA margin improvement over FY26– 29E, driven by a higher mix of value-added products, scale up benefits from increased capacity utilisation at existing and new plants and overall operating leverage gains.
Are capacity expansions on track to support growth and cater to higher-margin export orders?
MAN operates two advanced manufacturing facilities in Anjar (Gujarat) and Pithampur (Madhya Pradesh), with a combined capacity of over 1.2 Mn TPA. The company is strengthening its growth pipeline through a 22 KTPA greenfield stainless steel seamless pipe facility in Jammu and the acquisition of National Pipe Company, which adds 430 KTPA of capacity. With a cumulative investment of INR ~15.8 Bn, the Jammu plant is scheduled for commissioning by end of FY27E. For FY27E, management has guided for consolidated revenue of INR 50,000–55,000 Mn with EBITDA margin of 13–15%, while NPC expected to contribute INR ~15,000 Mn at EBITDA margin of >15%, supported by an order book of USD 120 Mn (INR ~11.4 Bn). Notably, NPC has started generating revenue from day one following the acquisition, providing immediate revenue visibility and earnings contribution. MAN’s standalone business is expected to contribute INR ~40,000 Mn in revenue, backed by an order book of INR ~30.0 Bn.
Valuation:
We are constructive with MAN with a ‘BUY’ recommendation and target price of INR 690/share (INR 535/share earlier), driven by an improved business outlook, strong growth visibility, expected profitability expansion and capacity-led growth supported by a robust order book. We valued MAN using our EV/EBITDA multiple framework, assigning an EV/EBITDA multiple of 6x for FY28E. We consider these multiples conservative, given MAN’s strong ROCE trajectory, even under reasonable operating assumption. At our TP of INR 690/share, the implied FY28E valuation translates to PB/PE 1.6x/9.6x. This implied multiple reinforces the conservatism embedded in our valuation and support our positive view on MAN
Key Risks:
* Order Book: High dependence on a few large orders makes the order book vulnerable to delays or cancellations
* Capex: Large capex burden poses a risk if new plants fail to ramp up as planned
* Regulatory Risk: Regulatory changes may disrupt operations or lead to higher compliance cost
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SEBI Registration no.: INZ 000160131
