PSL - huge demand
India Equity Analysis, Reports, Recommendations, Stock Tips and more!
Search Now
Recommendations
Showing posts with label PSL. Show all posts
Showing posts with label PSL. Show all posts
Tuesday, June 29, 2010
Thursday, November 19, 2009
Sunday, February 08, 2009
Saturday, December 27, 2008
Sunday, September 07, 2008
PSL
Investments with a long-term perspective can be considered in the stock of PSL, which is the country’s largest manufacturer of high grade helical pipes.
At the current market price of Rs 308, the stock trades at about nine times its estimated FY09 per share earnings, assuming full equity dilution. This leaves considerable headroom for further appreciation in the stock’s price given PSL’s expanding order book, capacity additions and promising demand prospects.
Better realisations and margins from recently bagged orders and the likely contribution from its overseas units in the UAE and the US in the coming quarters also suggest strong earnings prospects.
PSL’s regional distribution presence and large installed capacity has helped it meet its customers’ need for compressed delivery schedules, giving it an edge over its competitors. Over the last three years, it has enjoyed sales and earnings growth of about 16 per cent and 37 per cent respectively, on a compounded annual basis.
The growth rates may improve further, considering the company’s current order book of Rs 6,000 crore (2.7 times its FY08 consolidated revenues). That a bulk of its current order book was bagged only recently amidst tough competition also points to PSL’s strong position in the market.
Another factor that highlights our optimism on the company’s business prospects is its raw material procurement policy. It covers its entire steel requirement within the shortest possible time after the receipt of any order, giving itself sufficient leeway to protect margins.
While operating margins had dipped by a percentage point to 9 per cent for the year ended March 2008, it is likely to improve in future as its US and UAE plants are slated to start production soon. The average realisation per tonne for pipes, which is currently around $100-200 per tonne net of steel price, may see improvement when these facilities begin contributing to the overall revenues. That both these ventures already have orders in hand also reduces any concerns regarding PSL’s ability to break into new markets.
The only flip side is PSL’s relatively high reliance on debt for working capital requirements for inventory maintenance and capacity expansion. While the costs may be easily absorbed with the current scenario of high demand and utilisation, the same could pose a threat to earnings if there were execution delays or orders, due to reduced capex spending by its user industries such as oil and gas.
Wednesday, August 27, 2008
Thursday, June 26, 2008
Thursday, June 05, 2008
Tuesday, January 29, 2008
Wednesday, January 16, 2008
Sunday, December 30, 2007
Tuesday, October 23, 2007
Tuesday, August 28, 2007
Monday, June 25, 2007
Thursday, June 21, 2007
Monday, February 26, 2007
From the Research Desk - PSL
PSL Ltd. (Q3FY07): Result Update
During the quarter the company executed orders of GAIL, Reliance and some other small orders. More than half the contribution to topline during the quarter has been from GAIL and Reliance. This helped the company register a 22.2% topline growth to Rs4.9bn in Q3FY07 against Rs4.1bn in the corresponding last year. For 9MFY07 the company registered topline growth of 10.4% to Rs11.8bn against Rs10.7bn last year. There was an improvement in bottomline by 54.5% and 47.2% for Q3FY07 and 9MFY07 respectively. This translates into nine month annualized EPS of Rs20.5.
The company has a healthy order book of Rs15bn as on December 31, 2006 majority of which will be executed over the next couple of quarters. Order book consists of orders from GAIL, Reliance and L&T in addition to exports (~20% of current order book) and other smaller orders. Of this orders worth about Rs1.5bn from GAIL and Rs2.5bn from Reliance will be executed over the next quarter. The order book consists of orders from oil & gas and water sector. With continued emphasis being on developing infrastructure for oil & gas and water transportation orders for the sector are expected to keep on flowing.
Robust order book coupled with expanded capacities will facilitate strong growth going forward. With industry demand scenario appearing good for the future especially for large diameter pipes the company is well positioned to take advantage of it. We expect the company to not only gain orders from the domestic arena but also from global markets. Pipes are amongst the most economical medium of transportation for high value commodities i.e. oil and gas, as they can transport large volumes thereby reducing cost. PSL is appropriately positioned to benefit from this development as it is amongst the foremost manufacturers of HSAW pipes in India who offer large diameter pipes. To add to its competitiveness the company’s 11 mills are strategically located across India in close proximity to the ports enabling it quick deliveries and reducing transportation costs. With the scenario for the pipes industry remaining robust over the longer term, our broad calculations indicate the company to close FY07E with an earnings of Rs21.9 and FY08E with 26.2.
Subscribe to:
Comments (Atom)