Adhunik Metalliks has recently been allotted Iron Ore Mines at Kulum in Orissa,about 120 kms from its plant in Rourkela.The Iron Ore from these mines has a rich ferrous content and reserves are adequate to feed the company’s requirement for the next 30 years or so. This will insulate the company from fluctuating Iron Ore prices .Company has also got significant coal reserves about 220 kms. from its plant site which can meet its captive coal requirements for 30 years.On forward integration ,Company has recently acquired Unistar Galvanising and Fabrication Ltd. The company is into transmission tower manufacturing and galvanised substation and galvanised telecom towers. In short its steel infrastructure player with orders from NTPC, Power Grid ,BHEL etc.This makes Adhunik a fully integrated manufacturer in the steel sector.
With equity capital of Rs. 91 crores,CMP of Rs. 58 ,and its expected EPS for FY07 of Rs. 8 per share, the share is available at P/E of just about 7. However for FY08 its top line is expected to be in the vicinity of Rs. 1600 crores, an increase of 100 % over its FY07 revenues of Rs. 800 crores and an expected EPS of close to Rs. 20.
Buy is recommended with atleast one year HOLD