Ratnamani Metals a conviction buy, available at cheap valuations: Kunj Bansal

In a chat with ET Now, Kunj Bansal, Centrum Wealth Management, shares his view on Ratnamani Metals.
ET Now: Why is Ratnamani Metals a conviction ‘buy’?
Kunj Bansal : This is a company which is clocking margins despite so much of pressure. It is into pipes and tubes. It just has ‘metals’ in its name, but it is not in metal business. May be, it is one of the reasons why the stock is available so cheap.
ET Now: So this is not a steel company. Let us just clear the air for our viewers; this is a pipe company which will gain because metal prices are down.
Kunj Bansal: Exactly. They have to pass a part of it. If we look at the historical numbers of the company, it has been operating at close to 15 per cent Ebitda margins, which is creditable for a company, if you we look at last two-three years of slowdown that the sector has had.
In terms of return on equity (RoE), the company generates close to 20 per cent return on equity (RoE); it also has net cash because it is a zero-debt company. The recent quarterly numbers have been good, although the sector could still have growth issues. Given the fact that on a very broad consensus basis, it is available at 13-14 times forward PE, and given the numbers, it falls in a good combination of valuations and numbers in place.