Edelweiss maintains 'Buy' recommendation on Usha Martin
UML recently completed its blooming and section mill of 275 kt and wire rod mill expansion to 400 ktpa, as a part of its ongoing expansion plan.
By ET Bureau |
USHA MARTIN
RESEARCH: EDELWEISS
RATING: BUY
CMP: Rs 72
Edelweiss maintains `Buy' recommendation on Usha Martin (UML). UML recently completed its blooming and section mill of 275 kt and wire rod mill expansion to 400 ktpa, as a part of its ongoing expansion plan. The steel capacity expansion to 0.7 mt, additional DRI capacity of 100 ktpa, and new blast furnace capacity are expected to come onstream in Q3FY10/Q4FY10. The steel capacity will be enhanced to 0.9 mt by March 10.
Overall, the project will increase scale, improve product mix and enable the company to cater to new segments of telecom and power transmission and construction.
The company will benefit from: (i) commissioning of a 30-MW captive power plant, which will result in savings of Rs 9.2 crore; (ii) reduction in cost of bought out metallics by Rs 40 crore due to increase in sponge iron capacity; and (iii) coke cost saving of Rs 130 crore on existing production. Usha Martin offers a variety of products in the wire rope segment. It is India's largest and the world's second largest manufacturer of steel wire ropes. The company is a leader in wires, wire ropes and strands. We are assuming billet production of 395 ktpa and 575 ktpa in FY10E and FY11E respectively.
RESEARCH: EDELWEISS
RATING: BUY
CMP: Rs 72
Edelweiss maintains `Buy' recommendation on Usha Martin (UML). UML recently completed its blooming and section mill of 275 kt and wire rod mill expansion to 400 ktpa, as a part of its ongoing expansion plan. The steel capacity expansion to 0.7 mt, additional DRI capacity of 100 ktpa, and new blast furnace capacity are expected to come onstream in Q3FY10/Q4FY10. The steel capacity will be enhanced to 0.9 mt by March 10.
Overall, the project will increase scale, improve product mix and enable the company to cater to new segments of telecom and power transmission and construction.
The company will benefit from: (i) commissioning of a 30-MW captive power plant, which will result in savings of Rs 9.2 crore; (ii) reduction in cost of bought out metallics by Rs 40 crore due to increase in sponge iron capacity; and (iii) coke cost saving of Rs 130 crore on existing production. Usha Martin offers a variety of products in the wire rope segment. It is India's largest and the world's second largest manufacturer of steel wire ropes. The company is a leader in wires, wire ropes and strands. We are assuming billet production of 395 ktpa and 575 ktpa in FY10E and FY11E respectively.
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