CapitalAim
Maithan Alloys (Buy)
CMP: ₹549.45
Target: ₹700
Maithan Alloys is among India’s leading manufacturers and exporters of niche value-added manganese alloys. The company supplies customised manganese alloys to large and growing steel companies.
For the quarter ended March 31, 2019, the company has reported consolidated sales of ₹549.3 crore up 15.23 per cent per cent from last quarter sales of 476.67crore and up 24.72 per cent from last year same quarter sales of ₹440.4 crore. Company has reported net profit after tax of ₹70.1 crore in the latest quarter, up by 29.95 per cent q-o-q, while y-o-y down by 21 per cent.
We believe Maithan Alloys is undervalued at this level with current PE around 6.5. Company is facing problem in EBITDA margin that is now 17.3 per cent which was 21.6 per cent last year due to volatility in Prices. EBITDA margin is expected to remain between 15 per cent to 17 per cent. Company is also working on expansion plans in near future. Company has reduced its debt and is virtually debt free. It has good consistent profit growth of 46.59 per cent over five years. Company has a good return on equity (ROE) track record: 3 Years ROE 35.03 per cent .