Fundamental Stock

KAMDHENU LTD - Equity Research Report
DATE: 06/06/2018
  • COMPANY NAME: KAMDHENU LTD
  • BSE CODE: 532741
  • NSE CODE: KAMDHENU
  • SECTOR: Steel
  • BUY: Between 170-200
  • TARGET: 300 Rs
  • MARKET CAPITAL: 497 Cr.
  • FACE VALUE: 10
  • 52 WEEK HIGH/LOW: 110/290
  • BOOK VALUE: 47.75
  • DIVIDEND YIELD(%): 8%
  • SHARE PLEDGE : Nil
  • CURRENT PRICE/EARNING (TTM): 31
  • TTM EPS: 6.42
  • PRICE TO BOOK VALUE: 4.27
  • DESCRIPTION:

     

    Recommendation - Buy between 170-200 Rs

    Hold for 2 years

    Target: 300 Rs. plus

    Expected Return: 50% plus

     

    • CMP: 204 Rs
    • BSE Code: 532741
    • NSE- KAMDHENU
    • Market Capital: 497 Cr.
    • Face Value: 10
    • 52 Week Low / High: 110/290
    • Book Value: 47.75
    • Price/Book Value: 4.27
    • Promoter Share Pledge – Nil
    • TTM EPS – 6.42
    • P/E – 31.78
    • Industry P/E – 29.24

     

    Part – 1 Company’s Information:

    • The company was established in 1995 and having Manufacturing plant at Bhiwadi in Rajasthan
    • Operating in the business of steel manufacturing.
    • Kamdhenu Group is the largest reinforcement bars manufacturing group in India.
    • Kamdhenu Limited ventured into Franchisee Business Model to bring more transparency and dynamism to the operations of the company.
    • Kamdhenu Group has in its list of manufacturing, marketing, branding and distribution of a diverse range of products including Reinforcement steel Bars, Structural steels, Binding Wire, Colour Coated Sheets, Plywood, Paints
    • Kamdhenu also forayed into decorative paints business in 2008 and having 4000 dealers for paints across the country
    • 8500 dealers and distributors spread across the entire country for steel business at the end of 2017.
    • 70 franchise units of manufacture steel rebars,structural steel products & colour oated profile sheet at the end of 2017.

     

    Part – 2 Company’s Manufacturing Details:

     

    • Compnay owned Steel Division : Bhiwadi Small capacity of 72,000 MTPA steel bar having State-of-the-art Tempcore Technology from CRM, Belgium
    • Paint Division - Installed capacity of ~46,000 tonnes p.a.

     

    Manufacturing Franchiese company Production Capacity :

    • Steel Rebars – 25 Lacs MT per annum
    • Structural Steel – 5 Lacs MT per annum
    • Coloured Coated Profile Sheets – 2.5 Lacs MT per annum

     

    Part – 3 Company’s Products

    • TMT (Thermo Mechanicallly Treated Bars)
    • Kamdhenu SS 10000
    • Kamdhenu Nxt
    • Structural Steel
    • Colourmax Colour Coated ppgi/ppgl Sheets
    • Pre Engineered Building
    • Kamdhenu Paints

     

    Part – 4 Products Use

     

    • TMT (Thermo Mechanicallly Treated Bars) bars are widely used in general purpose concrete reinforcement structures, bridges and flyovers, dams, thermal and hydel power plants, industrial structures, high-rise buildings, underground platforms in metro railway and rapid transport system.
    • kamdhenu ss 10000 –Construction Industries
    • Kamdhenu Nxt - widely used in concrete reinforcement structures like bridges, flyovers, dams, thermal and hydel plants, industrial towers, skyline buildings, underground platforms etc
    • Structural Steel - The company has begun the production of a multitude of special contours such as angles, channels, beams, flats, round & square.
    • Colourmax Colour Coated ppgi/ppgl Sheets - used in architecture, construction, industry and road safety.
    • Pre Engineered Building- PEB are steel structures built over a structural concept of primary members, secondary members, roof & wall sheeting connected to each other & various other building components
    • Kamdhenu PAINTS - Today, the company boasts of offering complete range of paint products that includes Exterior & Interior Emulsions, Water based primers, Wood Finishes, Aluminium Paints and Textured & Designer Paints.

     

    Part – 5 Company’s - Shareholding Pattern:

     

    Part – 6 Company’s – Dividend History:

     

     

    Part – 7 Financial Focus:

    Focus on - Financial Results March 2017:

     

    • The Company has earned gross Sales and Operating Revenues of Rs.86834 Lakhs during the financial year 2016-17 registering a decline of 2% compared to last year. Decline in revenues is mainly on account of decrease in the selling price of steel products.
    • Profit after tax increased by 21% to Rs.983 Lakhs in the financial year 2016-17 compared to Rs.815 Lakhs in the financial year 2015-16 inspite of adverse market conditions.
    • The earnings per share for the year is Rs.4.20 as against Rs.3.48 in the previous year.

     

    Focus on - Financial Results Q4 2018

    • For the quarter ended 31-03-2018, the company has reported a Standalone sales of Rs 375.61 Crore, up 23.13 % from last quarter Sales of Rs 305.05 Crore and up 55.06 % from last year same quarter Sales of Rs 242.24 Crore
    • Company has reported net profit after tax of Rs 5.65 Crore in latest quarter.

     

    Investment Rational:

    1. Debt free company
    2. Continuous growth in Revenue & Profit
    3. Strong franchisee business model with strong products brand
    4. Strong dealers and distributer across the country.
    5. Suspecting robust growth in various industries, such as automobile, Construction industries, wind industries will boost the demand of still & paint which leads growth in top line and bottom line growth can be seen in future.
    6. Government Affordable housing scheme will boost the consumption of steel and paint
    7. Government initiative housing for all by 2022 will boost the consumption of steel and paint
    8. Government initiative Make in India scheme
    9. Rising consumption - According to Boston Consulting Group (BCG) report, India is expected to be the third largest consumer economy as its consumption may triple to US$ 4 trillion by 2025, owing to shift in consumer behavior and expenditure pattern. A recent Pricewater House Coopers report estimates that India will surpass USA to become the second largest economy in terms of purchasing power parity (PPP) by the year 2040.
    10. Market research analyst predicts the Indian steel industry to grow at a CAGR of almost 7% by 2020
    11. As per “India Paint Industry Outlook 2022” report, it is expected to grow at a CAGR of around 12% during 2016-17 to 2021-22 in value terms

     

    Recommendation:

    • Stock CMP is 204 Rs. and stock is trading at P/E 31 & TTM EPS 6.42, based on all above investment points, stock may touch 300 Rs. Within 2 years’ time horizon and 350 Rs within 3 years’ time horizon.

     

     

    Please note:

    • Note: The articles are not research reports but assimilation of information available on public domain and it should not be treated as a research report.

      Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations”

      Disclosure: It is safe to assume that I might have the discussed companies in my portfolio and hence my point of view can be biased. Readers should consult registered consultants before making any investments.

     

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