Stock Tales are concise, holistic stock reports across wider spectrum of sectors. Updates will not be periodical but based on significant events or change in price. Stock _____ TALES April 23, 2020
Stock Tales are concise, holistic stock reports across wider spectrum of sectors. Updates will not be periodical but based on significant events or change in price.
Stock_____
TALES
April 23, 2020
ICIC
I S
ecurit
ies –
Retail E
quit
y R
esearch
Stock T
ale
s
April 23, 2020
CMP: | 209 Target: | 256 (22%) Target Period: 12 -18 months
Mishra Dhatu Nigam (MISDHA)
BUY
On strong footing....
Mishra Dhatu Nigam (Midhani), a Mini Ratna (Category – I) company, is a
leading manufacturer of special steel, super alloys & titanium alloys catering
to niche end-user segment like space, defence, energy, etc. Within the
overall steel market, Midhani’s area of focus is on speciality steel (nickel
based alloys and speciality alloys). These alloys are used across end user
applications that require reduced weight, high strength & toughness and
high corrosion & oxidation resistance. Despite high cost when compared to
conventional steel & alloy grades, the select products are preferred for high-
end applications (space, defence, etc) where efficiency and precision is of
prime importance. Midhani is in the business of manufacturing these high-
value added products wherein majority of orders executed are import
substitute. Over the years, Midhani has acquired competence to develop
and manufacture customised alloys tailor-made to suit the specific
requirements of customers for their critical applications.
Healthy traction in Isro budget augurs well for Midhani….
During FY11-20, the government’s budget allocation to Isro has increased at
a healthy pace of 13% to | 13139 crore (Revised Budget of FY20). Of this, a
majority of increase is driven by a rise in Isro’s capital expenditure, which
has augured well for speciality steel supplier like Midhani. Over the last few
years, space segment has emerged as a key user industry that has aided the
company’s overall financial performance. Midhani’s space sector order book
has increased from | 108 crore in FY12 to | 1280 crore in FY19.
EBITDA margins on uptrend on higher space sector orders….
Typically, for Midhani, space sector orders are higher margin orders (at
EBITDA level space sector margin are 2x defence). Higher proportion of
space sector orders being executed has aided Midhani’s margin expansion.
The space sector contribution in aggregate topline has steadily increased
from 5% in FY16 to 55% in H1FY20. Generally, as the space sector
commands higher operating margins, the higher contribution by the same
has aided in margin expansion (from 25.8% in FY19 to 29.2% in 9MFY20).
Valuation & Outlook
On account of its high-end speciality product basket, Midhani distinguishes
itself from a normal steel producer. Hence, unlike a commodity company,
Midhani has not witnessed cyclicality in earnings wherein (since FY15) the
company has been able to consistently report 21%+ EBITDA margins and
17%+ RoCE. With a healthy proportion of space sector orders in the overall
order book, we expect overall EBITDA margins to remain firm in the ~30%
range for the next couple of years. Going forward, in FY19-22E, we expect
topline, EBITDA and PAT to grow at a CAGR of 12%, 18% and 19%,
respectively. We value the stock at 20x FY22E EPS and arrive at a target price
of | 256. We assign a BUY rating to the stock. Key risk to our call is any
notable slowdown in space contract order inflow/execution.
Key Financial Summary
s
(| crore) FY18 FY19 FY20E FY21E FY22E FY19-22E CAGR ( in %)
Total Operating incme 661.7 710.8 711.4 808.7 1,004.0 12
EBITDA 190.9 183.7 209.9 240.6 301.2 18
EBITDA Margin (%) 28.8 25.8 29.5 29.8 30.0
Net Profit 131.3 130.6 156.9 178.3 217.9 19
Diluted EPS (|) 7.0 7.0 8.4 9.5 11.6
P/E 30.3 30.4 25.3 22.3 18.2
RoE (%) 16.6 15.6 17.3 17.8 19.2
RoCE (%) 19.4 17.1 18.0 19.0 21.1
Source: Company, ICICI Direct Research
v
Particulars
Particulars Amount
Market Capitalisation (in | crore) 3,970.8
Debt in | crore (FY19) 106.7
Cash & Cash Eq. in | crore (FY19) 198.0
EV (in | crore) 3,879.5
52 Week H / L (|) |278/|109
Equity Capital (| crore) 187.3
Face Value (|) 10.0
Price Performance
Key Highlights
Healthy outstanding order book of |
1776 crore as on January 2020,
driven by strong traction witnessed
in space sector vertical
Recommend BUY on stock with
target price of | 256
Research Analyst
Dewang Sanghavi
0
2000
4000
6000
8000
10000
12000
0
30
60
90
120
150
180
210
240
270
Apr-18
Jul-18
Oct-18
Jan-19
Apr-19
Jul-19
Oct-19
Jan-20
Apr-20
Midhani NSE500 Index (RHS)
ICICI Securities | Retail Research 2
ICICI Direct Research
Stock Tales | Mishra Dhatu Nigam
Company Background
Mishra Dhatu Nigam (Midhani) was established in 1973, with the aim of
achieving self-reliance in research, development and supply of critical alloys
and products of national security and strategic importance. Midhani is
engaged in manufacturing a wide range of special metals and alloys. The
company’s products have superior mechanical properties and better
workability, which are essential for special applications in aerospace, power
generation, nuclear, defence and other general engineering. In 2009,
Midhani was accorded Mini Ratna (Category – I) status by the Ministry of
Defence (MoD).
The company manufactures special steel like martensitic steel, ultra-high
strength steel, austenitic steel and precipitation hardening steel. The super
alloys division manufactures three kinds of super alloys – nickel based, iron
based and cobalt based. Midhani is also the sole manufacturer of titanium
alloys in India. The company has competence in developing and
manufacturing customised alloys tailor-made to suit the specific
requirements of customers for their critical applications. Midhani has several
certifications including ISO 9001:2008 – quality management system and
AS9001 C for manufacturing and supply of metals & alloy products. The
company’s research & development (R&D) laboratory is also accredited to
the National Accreditation Board for Testing and Calibration Laboratories.
Exhibit 1: Trend in revenue (| crore) & EBITDA margin (%)
Source: Company, ICICI Direct Research
Exhibit 2: Trend in sales volume (in tonnes)
Source: Company, ICICI Direct Research,
Exhibit 3: Trend in blended realisations (in | lakh/tonne)
Source: Company, ICICI Direct Research
647 717 773 662 711
20.8 21.1
24.0
28.8
25.8
0.0
5.0
10.0
15.0
20.0
25.0
30.0
0
250
500
750
1000
1250
FY15 FY16 FY17 FY18 FY19
(%
)
(in
| c
rore)
4732
5205
6150
4477
3685
0
1000
2000
3000
4000
5000
6000
7000
FY15 FY16 FY17 FY18 FY19
(in
tonnes) 13.9
14.6
13.2
14.9
19.3
0.0
5.0
10.0
15.0
20.0
25.0
FY15 FY16 FY17 FY18 FY19
(in
| lakhs p
er t
onne)
ICICI Securities | Retail Research 3
ICICI Direct Research
Stock Tales | Mishra Dhatu Nigam
Investment Rationale
Healthy traction in Isro budget augurs well for Midhani….
During FY11-20, the government’s budget allocation to Isro increased at a
healthy pace of 13% to | 13139 crore (Revised Budget of FY20). Of this, a
majority of the increase is driven by a rise in Isro’s capital expenditure (as
depicted in Exhibit 4), auguring well for speciality steel supplier like Midhani.
Over the last few years, the space segment has emerged as a key user
industry, which has aided the company’s overall financial performance.
Midhani’s space sector order book has increased from | 108 crore in FY12
to | 1280 crore in FY19.
Exhibit 4: Budget allocation towards Isro on uptrend…
Source: Company, ICICI Direct Research
Generally, as the space sector commands higher operating margins, the
higher contribution by the same has aided in margin expansion (from 25.8%
in FY19 to 29.2% in 9MFY20). Majority of Midhani’s supplies to Isro within
the space sector are maraging steel (a nickel heavy alloy steel). Typically,
the orders for maraging steel are received on a nomination basis while
pricing is done by bilateral negotiation on a cost-plus basis. Generally,
Midhani commands healthy margin (above the blended average) in
maraging steel as there is a lengthy time period for joint development of
product with Isro. Hence, a higher share of maraging steel in aggregate
orders is likely to result in healthier operating margins.
Going forward, India Space Research Organisation (Isro) has slated 36
missions for the next two years. These will include milestone missions like
Chandrayaan-3 (moon lander mission) and an uncrewed mission for
Gaganyaan (human flight mission). During 2020-21, Isro has scheduled the
launch of several satellites including 10 earth observation satellites, three
communication satellites, two navigation satellites and three space science
satellites. Among rocket launches, Isro has scheduled launches of 10 PSLVs,
three GSLV MK II, and one GLSV MK III. In addition, two small satellite launch
vehicles are also planned for 2020-21. For 2019 and 2020, Isro has
successfully completed 11 out of the total targeted missions—four Earth
observation satellites, Chandrayaan-2, four PSLVs and one communications
and one space science satellite. One of the most anticipated upcoming
missions of the space agency, Gaganyaan, is scheduled for launch in 2022.
However, before that, Isro is likely to send two uncrewed missions — one
by the end of 2020 and another by mid-2021. The precursor missions are
supposed to carry a humanoid robot that will study the environment and
perform all tasks designated for humans to be conducted in orbit.
0
2000
4000
6000
8000
10000
12000
14000
FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 REFY20
(|
crore)
Main components of maraging steel are a) pure iron
(with nitrogen and oxygen concentration of less than
20 ppm) mainly imported, b) nickel 18%, c) cobalt
12% and d) Molybdenum ~5%.
ICICI Securities | Retail Research 4
ICICI Direct Research
Stock Tales | Mishra Dhatu Nigam
Space sector contributes ~43% of total revenue in FY19…
In terms of key customers, space and defence sector are the two key
verticals accounting for a lion’s share of Midhani’s topline and order book.
Over the years, Midhani’s capability of supplying niche steel to defence
sector has been its key strength. Traditionally, the defence segment had
been the key customer of Midhani (that includes supplies for Akash missiles
and submarines). However, post FY15, with launches by Isro gaining
traction, there has been a higher contribution by the space segment. Over
the last two to three years, Midhani has witnessed healthy traction in space
sector orders, resulting in higher execution of the same. Space sector
contribution in aggregate topline has steadily increased from 5% in FY16, to
22% in FY17, 30% in FY18 and further to 43% in FY19. Generally, as the
space sector commands higher operating margins, the higher contribution
by the same has aided in margin expansion.
Exhibit 5: Execution of space segment orders has seen
increasing trend since FY16…
Source: Company, ICICI Direct Research
Exhibit 6: …subsequently resulting in higher share of
contribution of space segment in overall revenue…
Source: Company, ICICI Direct Research
Current order book ~2.5x FY19 topline…..
After registering a flattish trend in FY17 and FY18, Midhani’s order book
witnessed a remarkable increase in FY19 and 9MFY20, auguring well for the
company. Midhani’s order book was at | 651 crore at the end of FY17 and
| 569 crore at the end of FY18. However, since March 2018, on the back of
receipt of healthy orders from the space segment, Midhani’s order book
increased to | 1660 crore at the end of FY19 and further to | 1776 crore as
on January 2020. Currently, order book is ~2.5x FY19 topline, thereby
providing healthy revenue visibility (FY19 topline was at | 711 crore).
Exhibit 7: Upsurge in order book...
Source: Company, ICICI Direct Research, The Cumulative Order book as on January 2020 is |1776 crore.
0
250
500
750
1000
FY16 FY17 FY18 FY19
(|
crore)
Order executed
Others Defence Space
12% 6% 12%
26%
84%
72% 58% 30%
5%
22%30%
43%
0%
20%
40%
60%
80%
100%
FY16 FY17 FY18 FY19
Share of topline
Others Defence Space
FY16 FY17 FY18 FY19
Space 325 60 114 1280
Defence 551 226 385 184
Others 33 35 137 380
0
500
1000
1500
2000
Others Defence Space
The rise in capability of Vikram Sarabhai Space
Centre (VSSC) has aided the upsurge in space sector
order book of Midhani. VSSC is a major space
research centre of Isro, focusing on rocket and space
vehicles for India's satellite programme
Notable portion of Midhani’s capex funded by its
customers, which augurs well for the company
ICICI Securities | Retail Research 5
ICICI Direct Research
Stock Tales | Mishra Dhatu Nigam
Healthy traction in space sector order book….
Over the last few quarters, there has been a steady increase in Midhani’s
order book driven by strong traction in the space sector. As on January 1,
2020, Midhani’s order book was at | 1776 crore. Going forward also, strong
traction is expected in the company’s order book, which will ensure healthy
revenue visibility. Of the total order book, ~| 800 crore is a one-year cycle
order book while balance ~| 800-900 crore is two-year cycle order book.
Going forward, ~| 800-900 crore of order inflow is expected every year of
which ~| 300-400 crore worth of orders are expected from the space
vertical, ~| 250-300 crore worth of orders are expected from the defence
vertical while balance orders are likely to come from others segment.
Furthermore, over the next two to three years, the management expects the
current order book of ~| 1776 crore to normalise to ~| 900 crore. This
indicates swift execution of orders in the near term.
Well-placed to capitalise on growth opportunities….
In future, Midhani plans to grow (through both greenfield & brownfield route)
based on development of technology for customers & product. It also seeks
to enter new markets of oil & gas, mining, power, railways, chemicals,
fertilisers, etc. Also, with the aim to expand its geographical presence,
Midhani is in the process of setting up two new manufacturing facilities in
Rohtak (armoured products manufacturing plant) and Nellore (Aluminium
alloy plant). Of the two new plants, the Rohtak plant would be operational
first and is likely to be fully operational by September 2020. Midhani has also
entered into collaborations with Indian & international research institutions
to gain capabilities for developing advanced technology products that will
aid import substitution.
EBITDA margins to remain flattish at ~30%…
For 9MFY20, Midhani reported an EBITDA margin of 29.0% against an
EBITDA margin of 25.8% in FY19. The increase in EBITDA margin was
primarily driven by higher proportion of space sector orders executed in
9MFY20 compared to FY19. Space segment orders generally yield higher
operating margins compared to average margins, which aided margin
expansion for Midhani. Even for the outstanding order book of | 1776 crore,
a healthy ~70% of the order book is from the space sector (Isro). While there
is a healthy proportion of space sector orders in the overall order book, we
do not expect any notable uptick in margins because of Covid-19 related
concerns, which may lead to postponement of some orders. Hence, we
expect the company to witness a flattish trend in EBITDA margins.
Exhibit 8: Trend in EBITDA margin
Source: Company, ICICI Direct Research
28.8
25.8
29.5 29.8 30.0
20.0
25.0
30.0
35.0
FY18 FY19 FY20E FY21E FY22E
(in
%)
ICICI Securities | Retail Research 6
ICICI Direct Research
Stock Tales | Mishra Dhatu Nigam
Covid-19 related issues to postpone order execution….
In view of the global outbreak of Coronavirus Disease (Covid-19), Midhani
had received directives from Department of Public Enterprise (DPE) to
operate with skeletal staff between March 23, 2020 and March 31, 2020. The
company being a central public sector enterprise is complying with the
above directives issued by DPE. The Covid-19 lockdown impacted the final
testing, certification and shipment of materials in March 2020, thereby
impacting Midhani’s Q4FY20 performance. Hence there would be some
postponed of orders, which would spill over. With the lockdown being
extended till May 4, 2020, we expect Midhani’s H1FY21E performance to
also be soft as post lifting of lockdown there is likely to be a gradual pick-up
in order execution.
On account of Covid-19 related issues, the topline is likely to be flattish YoY
for FY20 (vis-à-vis FY19), against 37% YoY growth till 9MFY20. In a normal
scenario, the company would have grown at a healthy pace (as witnessed
in 9MFY20). However, Covid -19 related concerns have slowed down its
growth trajectory. Furthermore, even though 70% of Midhani’s order book
is skewed towards the space sector (which is generally higher margin), we
expect blended EBITDA margins to remain flattish, on expectations of a
muted H1FY20.
Nalco-Midhani JV to set up high-end aluminium alloy plant
Nalco has entered into a pact with Midhani to incorporate a joint venture to
set up a high-end aluminium alloy plant. The plant is expected to be
operational in the next four to five years and is likely to have a capacity of
~60000 tonnes. The blended per tonne realisation is expected to be in the
range of ~| 400000 per tonne and is likely to cater to demand from railways,
defence, aerospace and auto sector. Currently ~30000-35000 tonnes is
imported in this category. By the time the plant gets commissioned, overall
demand is likely to go up to 130000 tonnes. With regard to funding, the
company may get a third party if it agrees to come for a small stake. It is also
exploring an option to fund through compulsory convertible debentures
(CCD)/normal debt from banks, in which case third party funding will not be
required.
ICICI Securities | Retail Research 7
ICICI Direct Research
Stock Tales | Mishra Dhatu Nigam
Financial story in charts
Exhibit 9: Trend in total operating income (in | crore)
Source: Company, Reuters, ICICI Direct Research
Exhibit 10: Trend in EBITDA (in | crore)
Source: Company, ICICI Direct Research
Exhibit 11: Trend in net profit (in | crore)
Source: Company, ICICI Direct Research
662711 711
809
1004
0
250
500
750
1000
1250
FY18 FY19 FY20E FY21E FY22E
(in
| c
rore)
191 184
210
241
301
0
50
100
150
200
250
300
350
FY18 FY19 FY20E FY21E FY22E
(in
| c
rore)
131 131
157
178
218
-
50
100
150
200
250
FY18 FY19 FY20E FY21E FY22E
(in
| c
rore)
ICICI Securities | Retail Research 8
ICICI Direct Research
Stock Tales | Mishra Dhatu Nigam
Exhibit 12: Valuation Matrix
Years Total Op Income Growth EPS Growth PE EV/EBITDA RoNW RoCE
(| cr) (%) (Rs) (%) (x) (x) (%) (%)
FY18 661.7 -14.4 7.0 3.9 30.3 20.4 16.6 19.4
FY19 710.8 7.4 7.0 -0.5 30.4 21.1 15.6 17.1
FY20E 711.4 0.1 8.4 20.2 25.3 18.2 17.3 18.0
FY21E 808.7 13.7 9.5 13.7 22.3 15.9 17.8 19.0
FY22E 1004.0 24.1 11.6 22.2 18.2 12.8 19.2 21.1
Source: Company, ICICI Direct Research
Exhibit 13: Top 10 Shareholders
Rank Name Latest Filing % O/S Position (m) Change (m)
1 Government of India 30-06-2019 74.0 138.6 0.0
2 HDFC Asset Management 31-12-2019 7.2 13.4 0.6
3 Life Insurance Corporation 30-06-2019 6.6 12.3 -1.7
4 Reliance Capital Trust 31-12-2019 3.3 6.1 0.0
5 Invesco India Asset 31-12-2019 2.9 5.4 0.3
6 New India Assurance 30-06-2019 1.3 2.4 0.0
7 General Insurance Co. 30-06-2019 1.1 2.1 0.0
8 Van Eck Associates 23-01-2020 0.1 0.2 0.0
9 Dimensional Fund Adv. 30-11-2019 0.0 0.0 0.0
10 ICICI Prudential Assets. 31-12-2019 0.0 0.0 0.0
Source: Reuters, ICICI Direct Research
Exhibit 14: Shareholding pattern
Source: Company, ICICI Direct Research
ICICI Securities | Retail Research 9
ICICI Direct Research
Stock Tales | Mishra Dhatu Nigam
Financial summary
Exhibit 15: Profit and loss statement | crore
Source: Company, ICICI Direct Research
Exhibit 16: Cash flow statement | crore
Source: Company, ICICI Direct Research
Exhibit 17: Balance sheet | crore
Source: Company, ICICI Direct Research
Exhibit 18: Key ratios | crore
Source: Company, ICICI Direct Research
(Year-end March) FY19 FY20E FY21E FY22E
Total Operating Income 711 711 809 1,004
Growth (%) 7% 0% 14% 24%
EBITDA 184 210 241 301
Growth (%) -4% 14% 15% 25%
Interest & Finance Cost 6 5 5 5
Depreciation 23 27 30 39
Other Income 37 32 33 34
PBT before Exceptional Items 191 210 238 291
Less: Exceptional Items 0 0 0 0
PBT 191 210 238 291
Total Tax 60 53 60 73
PAT 131 157 178 218
Growth (%) -1% 20% 14% 22%
EPS 7.0 8.4 9.5 11.6
(Year-end March) FY19 FY20E FY21E FY22E
Profit/(Loss) after taxation 131 157 178 218
Add: Dep. & Amortization 23 27 30 39
Net (Inc) / dec.in Current Asset (281) (3) (126) (180)
Net Inc / (dec) in Current Liab. 95 43 78 95
CF from Operating Actv. (32) 224 161 173
(Inc)/dec in Investments - - - -
(Inc)/dec in Fixed Assets (214) (225) (200) (200)
Others - - - -
CF from Investing Actv. (214) (225) (200) (200)
Inc / (Dec) in Equity Capital - - - -
Inc / (Dec) in Loans 14 - - -
Dividend & Dividend Tax (85) (84) (84) (84)
Others 336 156 102 100
CF from Financing Actv. 264 72 18 16
Net Cash flow 18 71 (21) (11)
Opening Cash 180 198 269 248
Closing Cash 198 269 248 236
(Year-end March) FY19 FY20E FY21E FY22E
Equity Capital 187 187 187 187
Reserve and Surplus 647 720 814 948
Total Shareholders funds 835 907 1001 1135
Total Debt 107 107 107 107
Other Non-Current Liabilities 416 566 666 766
Deferred Tax Liability (net) 40 45 51 59
Source of Funds 1397 1625 1826 2067
Gross Block - Fixed Assets 499 674 749 974
Accumulated Depreciation 74 101 131 170
Net Block 425 573 618 804
Capital WIP 175 225 350 325
Net Fixed Assets 600 798 968 1129
Investments 2 2 2 2
Inventory 509 507 576 688
Cash 198 269 248 236
Debtors 352 341 388 440
Loans & Advances & Other CA 105 121 130 146
Total Current Assets 1164 1237 1342 1510
Creditors 129 117 133 165
Provisions & Other CL 299 353 415 478
Total Current Liabilities 427 470 548 643
Net Current Assets 736 767 793 866
Other Non-current assets 59 58 62 70
Application of Funds 1397 1625 1826 2067
(Year-end March) FY19 FY20E FY21E FY22E
Per share data (|)
EPS 7.0 8.4 9.5 11.6
BV 44.6 48.4 53.4 60.6
DPS 3.8 3.8 3.8 3.8
Cash Per Share 10.6 14.4 13.2 12.6
Operating Ratios (%)
EBITDA margins 25.8 29.5 29.8 30.0
PBT margins 26.9 29.5 29.5 29.0
Net Profit margins 18.4 22.1 22.0 21.7
Inventory days 261 260 260 250
Debtor days 181 175 175 160
Creditor days 66 60 60 60
Return Ratios (%)
RoE 15.6 17.3 17.8 19.2
RoCE 17.1 18.0 19.0 21.1
RoIC 21.6 24.6 24.5 26.1
Valuation Ratios (x)
P/E 30.4 25.3 22.3 18.2
EV / EBITDA 21.1 18.2 15.9 12.8
EV / Revenues 5.5 5.4 4.7 3.8
Market Cap / Revenues 5.6 5.6 4.9 4.0
Price to Book Value 4.8 4.4 4.0 3.5
Solvency Ratios
Debt / Equity 0.1 0.1 0.1 0.1
Debt/EBITDA 0.6 0.5 0.4 0.4
Current Ratio 2.7 2.6 2.4 2.3
Quick Ratio 1.5 1.6 1.4 1.3
ICICI Securities | Retail Research 10
ICICI Direct Research
Stock Tales | Mishra Dhatu Nigam
Annexure
Exhibit 19: Overview of application of speciality steel
Select High Value Speciality
Steel Grades
Key End User Segment Application Area
Nickel Alloy
• Aeronautical
• Defence
• Auto Components
• Industrial Machinery
• Landing Gears
• Suspension Systems
• Braking Systems
• Crankshafts, Gears, Castings
High Strength Armour Grades
• Defence Vehicles for combat
• Armoured Vehicles
• SWAT Vehicles
• Ceilings
• Walls
• Doors
Martensitic Stainless Steel
• Aerospace
• Consumer Durables
• Medical
• Chemical
• Tools & Machineries
• Valve Parts
• Multi-purpose tools
• Surgical Instruments
• Shears
Ferritic Stainless Steel
• Aerospace
• Automotive
• Oil & Gas
• Chemical Plants
• Power Plants
• Processing Industries
• Exhaust Systems
• Automotive Exhaust Systems
• Heat Exchangers
• Furnace Combustion
Chamber
• Chemical and oil refinery
Asutenitic Stainless Steel
• Automotive
• Food Processing
• Chemical
• Pharmaceuticals
• Automotive Trim
• Food & Beverage Equipment
• Process Equipment
Precipitation Hardening Steel (PH)
• Aerospace
• Oil & Gas
• Power Plants
• Chemical Plants
• Exhaust Systems
• Oil Patch
• Pump Shafts
• Mechanical Seal
Source: Company, ICICI Direct Research
ICICI Securities | Retail Research 11
ICICI Direct Research
Stock Tales | Mishra Dhatu Nigam
Exhibit 20: Overview of application of superalloys
Super Alloy Grades Key End User Segment Application Area
Nickel Based Super Alloy
• Aeronautical
• Power Plants
• Oil & Gas
• Chemical Plants
• Jet Engine components
• Air frames
• Gas turbines
• Combusters
• Heat exchanger tubing
• Pump Motor Shaft
• Cyrogenic tanks
Iron Based Super Alloy
• Processing Industries
• Chemical Plants
• Power Plants
• Industrial Machineries
• Oil & Gas
• Processing Equipment
• Pre & Super Heaters
• Steam boilers
• Piping applications
• Industrial furnaces
• Valves & Fittings
Nickel - Iron Based Super Alloy
• Aerospace
• Defence
• Electric Appliances
• Power
• Industrial Machineries
• Consumer Durables
• Navigating Systems
• HV Transmission Lines
• Heaters
• Composite Moulds
• Electric Furnace
• Electronic Housings
Nickel - Chromium - Cobalt Alloy
• Aerospace
• Defence
• Power Plants
• Automotive
• Aerospace Fasteners
• High Temp Discs
• High Temp Springs
• Turbine Blades
• Exhaust re-heaters
Iron - Cobalt Alloy
Soft Magnetic Alloy
• Aerospace
• Defence
• Consumer Durables
• Industrial Machineries
• Power Stations
• Electronic Instruments
• Electric Motor Parts
• Electronic Appliances
• Sonar Applications
• Ultrasonic Equipments
Source: Company, ICICI Direct Research
Exhibit 21: Overview of application of titanium alloys
Titanium Alloy Grades Key End User Segment Application Area
Nickel Based Super Alloy
• Aerospace
• Defence
• Marine Applications
• Power Plants
• Oil & Gas
• Chemical Plants
• Pharmaceuticals
• Medical
• Processing Industry
• Aircraft Engine parts
• Aerospace exhaust system
• Chemical desalination
• Process Equipment
• Marine components
• Steam turbine blades
• Structural forgings
• Cryogenic parts
Source: Company, ICICI Direct Research
ICICI Securities | Retail Research 12
ICICI Direct Research
Stock Tales | Mishra Dhatu Nigam
RATING RATIONALE
ICICI Direct endeavors to provide objective opinions and recommendations. ICICI Direct assigns ratings to its
stocks according to their notional target price vs. current market price and then categorizes them as Buy, Hold,
Reduce and Sell. The performance horizon is two years unless specified and the notional target price is defined
as the analysts' valuation for a stock
Buy: >15%
Hold: -5% to 15%;
Reduce: -15% to -5%;
Sell: <-15%
Pankaj Pandey Head – Research [email protected]
ICICI Direct Research Desk,
ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
Mumbai – 400 093
ICICI Securities | Retail Research 13
ICICI Direct Research
Stock Tales | Mishra Dhatu Nigam
RATING RATIONALE
ICICI Direct endeavors to provide objective opinions and recommendations. ICICI Direct assigns ratings to its
stocks according to their notional target price vs. current market price and then categorizes them as Buy, Hold,
Reduce and Sell. The performance horizon is two years unless specified and the notional target price is defined
as the analysts' valuation for a stock
Buy: >15%
Hold: -5% to 15%;
Reduce: -15% to -5%;
Sell: <-15%
Pankaj Pandey Head – Research [email protected]
ICICI Direct Research Desk,
ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
Mumbai – 400 093
ANALYST CERTIFICATION
I/We, Dewang Sanghavi MBA (Finance) Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s)
or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. It is also confirmed that above mentioned Analysts of this report
have not received any compensation from the companies mentioned in the report in the preceding twelve months and do not serve as an officer, director or employee of the companies mentioned in the report.
Terms & conditions and other disclosures:
ICICI Securities Limited (ICICI Securities) is a full-service, integrated investment banking and is, inter alia, engaged in the business of stock brokering and distribution of financial products. ICICI Securities Limited is a SEBI registered
Research Analyst with SEBI Registration Number – INH000000990. ICICI Securities Limited SEBI Registration is INZ000183631 for stock broker. ICICI Securities is a subsidiary of ICICI Bank which is India’s largest private sector bank
and has its various subsidiaries engaged in businesses of housing finance, asset management, life insurance, general insurance, venture capital fund management, etc. (“associates”), the details in respect of which are available on
www.icicibank.com
ICICI Securities is one of the leading merchant bankers/ underwriters of securities and participate in virtually all securities trading markets in India. We and our associates might have investment banking and other business relationship
with a significant percentage of companies covered by our Investment Research Department. ICICI Securities generally prohibits its analysts, persons reporting to analysts and their relatives from maintaining a financial interest in the
securities or derivatives of any companies that the analysts cover.
Recommendation in reports based on technical and derivative analysis centre on studying charts of a stock's price movement, outstanding positions, trading volume etc as opposed to focusing on a company's fundamentals and, as
such, may not match with the recommendation in fundamental reports. Investors may visit icicidirect.com to view the Fundamental and Technical Research Reports.
Our proprietary trading and investment businesses may make investment decisions that are inconsistent with the recommendations expressed herein.
ICICI Securities Limited has two independent equity research groups: Institutional Research and Retail Research. This report has been prepared by the Retail Research. The views and opinions expressed in this document may or may
not match or may be contrary with the views, estimates, rating, target price of the Institutional Research.
The information and opinions in this report have been prepared by ICICI Securities and are subject to change without any notice. The report and information contained herein is strictly confidential and meant solely for the selected
recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of ICICI Securities. While we would
endeavour to update the information herein on a reasonable basis, ICICI Securities is under no obligation to update or keep the information current. Also, there may be regulatory, compliance or other reasons that may prevent ICICI
Securities from doing so. Non-rated securities indicate that rating on a particular security has been suspended temporarily and such suspension is in compliance with applicable regulations and/or ICICI Securities policies, in
circumstances where ICICI Securities might be acting in an advisory capacity to this company, or in certain other circumstances.
This report is based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. This report and information herein
is solely for informational purpose and shall not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Though disseminated to all the customers
simultaneously, not all customers may receive this report at the same time. ICICI Securities will not treat recipients as customers by virtue of their receiving this report. Nothing in this report constitutes investment, legal, accounting
and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and opinions expressed in this report may not be suitable for all investors, who
must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient.
The recipient should independently evaluate the investment risks. The value and return on investment may vary because of changes in interest rates, foreign exchange rates or any other reason. ICICI Securities accepts no liabilities
whatsoever for any loss or damage of any kind arising out of the use of this report. Past performance is not necessarily a guide to future performance. Investors are advised to see Risk Disclosure Document to understand the risks
associated before investing in the securities markets. Actual results may differ materially from those set forth in projections. Forward-looking statements are not predictions and may be subject to change without notice.
ICICI Securities or its associates might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any other assignment in the past twelve months.
ICICI Securities or its associates might have received any compensation from the companies mentioned in the report during the period preceding twelve months from the date of this report for services in respect of managing or co-
managing public offerings, corporate finance, investment banking or merchant banking, brokerage services or other advisory service in a merger or specific transaction.
ICICI Securities encourages independence in research report preparation and strives to minimize conflict in preparation of research report. ICICI Securities or its associates or its analysts did not receive any compensation or other
benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither ICICI Securities nor Research Analysts and their relatives have any material conflict of
interest at the time of publication of this report.
Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions.
ICICI Securities or its subsidiaries collectively or Research Analysts or their relatives do not own 1% or more of the equity securities of the Company mentioned in the report as of the last day of the month preceding the publication of
the research report.
Since associates of ICICI Securities are engaged in various financial service businesses, they might have financial interests or beneficial ownership in various companies including the subject company/companies mentioned in this
report.
ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report.
Neither the Research Analysts nor ICICI Securities have been engaged in market making activity for the companies mentioned in the report.
We submit that no material disciplinary action has been taken on ICICI Securities by any Regulatory Authority impacting Equity Research Analysis activities.
This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or
use would be contrary to law, regulation or which would subject ICICI Securities and affiliates to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in
all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.