In this edition, we have reviewed Man Industries (India) and Sandur Manganese & Iron Ores. We suggest our reader-investors to hold in Man Industries (India) and Sandur Manganese & Iron Ores.
We had previously recommended Man Industries (India) in volume 33, issue no. 22, dated October 1-14, 2018 under the ‘Low Priced Scrip’ segment. It was recommended based on robust order book, growth prospects in the pipe industry and very positive quarterly results. The company is engaged in manufacturing of LSAW line pipes, Hsaw line pipes and aluminium extruded products. The main business line includes manufacturing & coating of large diameter carbon steel pipes, infrastructure, realty and trading.
On the consolidated financial front, the company posted a fall of 62.24 per cent in Q1FY20 at Rs.238.85 crore from Rs.632.56 crore posted in Q1FY19. The PBIDT too fell on a YoY basis in Q1FY20 as it stood at Rs.23.17 crore, down from Rs.62.43 crore posted in the same quarter of the previous year. The profit after tax also fell by over 85 per cent to Rs.3.63 crore in Q1FY20 as compared to Rs.25.02 crore in the corresponding quarter of the previous year.
On the annual front, the net sales grew by 38 per cent in a year in FY19 to Rs.2,221.71 crore versus Rs.1,607.52 crore posted in FY18. The operating profit jumped 10 per cent in FY19 and stood at Rs.199.66 crore as compared to Rs.181.31 crore posted in FY18. The PAT however fell annually by 7 per cent to Rs.58.84 crore from Rs.63.69 crore posted in FY18.
On the valuations front, the company is currently trading at a P/E of 6.53x on its TTM earnings against the industry P/E of 11.55. The ROE stood at 8.47 per cent and the ROCE was at 15.38 per cent. The EPS on TTM basis stood at Rs.10.3. Since our recommendation the stock has fallen by 50 per cent.
However, we recommend our investor readers to HOLD.
We had recommended Sandur Manganese & Iron Ores in volume 33, issue no. 22, dated October 1-14, 2018 under the ‘Cover Story’ segment. The stock was previously recommended based on outstanding quarterly financial trend, attractive valuation and growth prospects in the steel sector. The company is an integrated commodity producer, engaged in the business of scientific mining, ferro alloy and power facilities, solar power and hospitality.
On the consolidated financial front, for Q1FY20, the company posted net sales of Rs.196.43 crore, which a decrease by 3.95 per cent compared to net sales of Rs.204.51 crore for Q1FY19. For Q1FY20, the company’s PBDT stood at Rs.84.39 crore, reducing by 2.74 per cent than the PBDT of Rs.86.77 crore in Q1FY19. Its net profit was Rs.54.56 crore in Q1FY20, slightly expanding by 2.29 per cent from Rs.53.34 crore in Q1FY19.
On the annual front, net sales in FY19 increased by 14.66 per cent to Rs.702.15 crore from Rs.612.4 crore. For FY19, PBDT increased by 30.46 per cent and was Rs.236.70 crore compared to Rs.181.43 crore for FY18. The company’s net profit was Rs.147.36 crore in FY19, significantly increasing by 32.35 per cent from Rs.111.34 crore in FY18.
The company has received reaffirmation in credit ratings and revision in outlook on the long-term rating from ‘Stable’ to ‘Positive’ by ICRA. On the valuations part, the company is trading at a PE of 3.66x while the industry PE stood at 9.62x. The shares of the company since our recommendation has fallen by 45.95 per cent. Due to better future prospects, we recommend our investor-readers to HOLD.
(Closing price as of Oct 09, 2019)