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Hidden Gem - Ratnaveer Precision Engineering
Ratnaveer Precision Engineering Ltd (RPEL), is a Gujarat based stainless steel (SS) product manufacturer focused on producing finished sheets, washers, pipes and tubes. Demand of SS sheets has been increasing at a CAGR of ~13% over the last 5-6 years. Going ahead, demand for SS sheets is expected to remain healthy at over the next 5 years, mainly driven by increasing usage in elevators, escalators, commercial kitchens, bus bodies, metro and railways coaches etc
Operational performance remained strong during the quarter, driven by expansion of capacities with increasing mix of value-added products
Revenue increased significantly by ~61% YoY (+13% QoQ) to Rs 230 crore. EBIDTA margin also improved by 140 bps YoY to 10.6%. PAT increased by 54% YoY to Rs 12.3 crore. For H1FY25, revenue is up ~67% YoY with EBITDA margin stands at 11.3% (vs 10.7% in H1FY24). PAT is up ~75% YoY to Rs 24.8 crore in H1FY25
Going ahead, we expect company would continue to see substantial revenue growth over the next 2-3 years, led by ongoing capex across its product segments. Demand traction is likely to remain strong from domestic & export markets
Moreover, focus on backward integration, operational efficiencies, favorable product mix and increasing share into better-margin segments like (railways, defence, energy etc) would further help in improving margins
We estimate revenue CAGR at ~24% CAGR over FY24-27E while EBITDA/PAT to grow at ~45%/~47% CAGR over the same period
Valuation at 15x P/E on FY26E looks attractive, considering the strong growth ahead. We have a target price of ₹ 290 (based on 20x P/E to FY26E EPS)
Disclaimer – I ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. I-Sec is acting as a distributor to solicit bond related products. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.
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