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Tuesday, November 24, 2009

Ratnamani Metals - A Good Stock To Buy In 2010

Continuing the series "Best Stocks To Buy For 2010", here is another good stock to buy in 2010 which could fetch you excellent returns over the next one year time horizon.

Ratnamani Metals & Tubes (BSE code:520111) produces a wide range of Stainless Steel Welded / Seamless Tubes & Pipes and Carbon Steel Welded Pipes. The company caters to the niche markets of almost all the emerging sectors like oil and gas, refineries, petrochemicals, process industries, power plants and water distribution.

Ratnamani Metals - A Good Stock To Buy In 2010The company has been witnessing gradual improvement in its business environment. RMTL’s specialty products consumed in high-growth sectors like power would drive the volumes going forward. Further, meaningful revival in orders from the refinery sector could add to incremental orders.

Recently, Ratnamani Metals & Tubes (RMTL) has bagged Rs 152-crore gas transmission and distribution order from Gas Authority of India. This is going to be a positive for RMTL particularly when viewed against the backdrop of slower inflow since couple of quarters. While the order inflow is positive, the same has been bit slower than analyst estimates.

In Q2FY2010, RMTL’s top line is expected to report a de-growth of 20% to Rs203.1
crore. The margins are expected to improve on year-on-year basis on the back of decline in raw material cost. On the back of fall in revenues, the adjusted profits would decline by 8.6% year on year.

Incorporating the numbers from annual accounts and slower order intake in July-September quarter, the revised revenue and profit estimates lead to earnings per share (EPS) estimates of Rs 17.4 and Rs 22.2 for FY 2010 and FY 2011 respectively.

Vital Numbers:

Market Cap 446.60
* EPS (TTM) 13.72
* P/E 7.22
* P/C 4.87
* Book Value 63.02
* Price/Book 1.57
Div(%) 90.00
Div Yield(%) 1.82
Market Lot 1.00
Face Value 2.00
Industry P/E 13.83

At the current market price of Rs. 98, the stock trades at 4.5x its FY2011 estimates, which is attractive and so one may buy stocks of the company. The stock price target could be Rs. 180 in a year's time i.e. almost double of CMP. Buy stocks on dips.

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