Business:
Maharashtra Seamless Limited is an
India-based company engaged in manufacturing seamless steel pipes and tubes in
India. The Company also manufactures coated pipes and electric resistance
welded (ERW) pipes, along with the seamless pipes. The Company has two segments:
steel pipes and tubes and electricity. The Company’s product range
caters to application areas like oil and gas sector, hydrocarbon industry,
boilers and heat exchangers, automotive, bearing and general engineering
industries. As of March 31, 2012, the Company commissioned the 6th seamless
pipe plant at Mangaon. As of March 31, 2012, the Company had two subsidiaries:
Maharashtra Seamless (Singapore) Pte Ltd, Singapore and Maharashtra Seamless
Finance Ltd.
Business
units and Plants:
Seamless Era and Pipes
Wind Power
Solar Power
Board
of Directors:
D.P. Jindal (Chairman)
Saket Jindal (Managing Director)
U.C.Agarwal, P.N.Vija, Sanjeev Rungta and N.C.Jain
Selected figures from
financial statements:
Particulars |
2004 |
2005 |
2006 |
2007 |
2008 |
2009 |
2010* |
2011 |
2012 |
2013 |
Gross Turnover (Rs. Lacs) |
55529.00 |
86724.00 |
107695 |
151961 |
164037 |
218351 |
169122 |
188741 |
242820 |
183782 |
EBIDTA (Rs. Lacs) |
10031.00 |
12851.00 |
20801.00 |
34101.00 |
29762.00 |
34244.00 |
39990.00 |
42331.00 |
39129.00 |
17053.00 |
PBT (Rs. Lacs) |
10507.00 |
12624.00 |
20685.00 |
35269.00 |
30190.00 |
38503.00 |
43109.00 |
49373.00 |
44258.00 |
19774.00 |
PAT (Rs. Lacs) |
7146.00 |
8488.00 |
13960.00 |
23384.00 |
19522.00 |
25784.00 |
28459.00 |
34166.00 |
31073.00 |
15332.00 |
Gross Block (Rs. Lacs) |
26709.00 |
32768.00 |
35303.00 |
37416.00 |
44321.00 |
51441.00 |
139084 |
150008 |
163593 |
168703 |
Net Block (Rs. Lacs) |
21970.00 |
26992.00 |
28075.00 |
28579.00 |
33746.00 |
39064.00 |
120783 |
125758 |
133257 |
130670 |
Equity (Rs. Lacs) |
2882.00 |
2882.00 |
2882.00 |
3497.00 |
3527.00 |
3527.00 |
3527.00 |
3527.00 |
3527.00 |
3527.00 |
Reserves (Rs. Lacs) |
21527.00 |
28399.00 |
38509.00 |
88913.00 |
105814 |
127472 |
225230 |
250389 |
272454 |
278745 |
Net (Rs. Lacs) |
24409.00 |
31281.00 |
41391.00 |
92410.00 |
109341 |
130999 |
228757 |
253916 |
275981 |
282272 |
Book Value (Rs.) |
85.00 |
109.00 |
144.00 |
132.00 |
155.00 |
186.00 |
324.00 |
360.00 |
391.00 |
400.00 |
Equity Dividend (Rs. Lacs) |
1153.00 |
1441.00 |
2132.00 |
3720.00 |
3527.00 |
3527.00 |
4232.00 |
4232.00 |
4232.00 |
4232.00 |
Dividend Per Share (Rs.) |
4.00 |
5.00 |
7.00 |
5.50 |
5.00 |
5.00 |
6.00 |
6.00 |
6.00 |
6.00 |
Earning Per Share (Rs.) |
23.72 |
29.54 |
48.26 |
38.38 |
27.70 |
36.56 |
40.35 |
48.44 |
44.05 |
21.74 |
Valuation
& Analysis:
The company trades in the market for around
1100 Cr. Rupees (Rs. 170/share). The
company has excess cash (700 Cr) on their balance sheet, which is invested in
various mutual funds. If we exclude the excess net cash, it is trading for less
than 3 times of the depressed annual profit & 1/3 of the stated book value,
and the RONW is over 15%. This is a cheap
company by any valuation metrics.
Market Cap – 1100 Cr. Net Cash – 700 Cr.
Book Value – 3527 Cr
Enterprise value – 400 Cr. Net Profit -152
Cr
Enterprise Value / Net Profit – 2.63
Market Cap/ Book Value - 0.37
The company has a low cost operation which
has the benefit of making huge profits when sales go up in the upcoming years.
The company’s board authorized a buyback of ~10% of the shares outstanding
& the buyback is currently in progress. This is great capital
allocation at work. The company also has a policy of paying out 1/3 of the
profit as dividends to the shareholders. In today’s stock price, the dividend
yield is more than 3.5%. The risk of losing
the invested capital for the investor at these prices is almost zero; the business is earning healthy profits on
the invested capital with excess capital in the balance sheet. At some point
the market participants will come to their senses, and bid up the stock prices
relative to the company’s profitability. At that point the shareholders will
realize huge profits via share price appreciation. If we are right about the
assessment/prospects of the company, the capital will compound at very high
rates.
Shareholders:
The company’s promoters hold 55% of the shares outstanding,
the remaining float is held by these following funds:
Odd & Even Trades and Finance P. Ltd. -
16.57%
Stable Trading Company
Ltd - 16.00%
Brahmadev Holding
& Trading Ltd - 8.16%
Global Jindal
Fin-Invest Ltd - 7.69%
Franklin Templeton
Investment Funds - 7.03%
Risks:
Continuous dumping of
steel pipes by abroad manufacturers decreases the revenue & profits of this company.
Disclosure:
I own shares of this
company.