DATE:07.06.

2008

www.niftyiews.com
Company Overview:-
• Rathi steel and power limited( Formerly rathi
Delete box, or
add logo, photo, udyog limited) is a 35 years old steel
or other image company. The company is owned and
here. operated by Punam chand Rathi and his son
Pradeep Rathi .
• The company originally started its
production in 1972 with the first rolling mill
in Ghaziabad in Uttar pradesh.In 2001
company started the production of Thermex
Tmt bars under “Rathi” brand.The
company’s ghaziabad plant had an installed
capacity of 125000 tonnes per annum in
2005 and 40000 tonnes of rolling capacity..
• "Rathi steel and power plant in Ghaziabad is
in the manufacture of long products
KEY STATS:-
including bars, wire rods, angles and
• CMP-20.5 channels which form the skeleton of all
• ORIGINAL kinds of construction. With the huge amount
RECOMMENDATION of investments initiated and awaited in the
PRICE 24.8 construction industry, the demand for these
• BSE CODE: -504903 products, which are to the tune of 20-25% of
the total investment, seems to be a no look
back at least for the next five-seven years.
• In 2005 the company signed a MOU with the
Government of Orissa for setting up a 0.3
mtpa sponge iron, steel billets and captive
power plant by taking advantage of the
TEAM Industrialization policy of the state
STOCKRESEARCHERS government and the abundant supply of coal
and iron available in the vicinity.
Pvt. Ltd. • The Orissa project has been set up on 250
acres of land in sambhalpur in orrisa.The
3 SUBHASHNAGAR CORNER,RAIYA ROAD,
plant is to be constructed in two phases with
RAJKOT, Gujarat, 360007
www.niftyviews.com
the first phase of 150000 tonnes per annum
CONTACT:09327744250 of sponge iron and 30Mw of captive power
CST NUMBER: AADCT0544JST001 plants.The second phase has an almost
similar capacity expansion
Investment Rationales:-
Rationales:-
• Over the years company has
been a dividend paying
company. Moreover at the
Cmp of Rs 20.5 the stock is
trading at 60% discount to its
Ipo price of 50 rs. Although
the main trigger for our
recommendation is not the
steep discount on the Ipo
price.
• The current capacity of the
• Two of our earlier
company in sambhalpur is
recommendations in the very
150000 tones of sponge iron
same space Jayasawals neco
and steel billets plant along
at 17 levels and Mspl at 18
with 30 MW captive coal
levels. (Refer the premium
block.
client’s mailer.) were
Multibagger • The reason I expect the OPM
recommendations. We expect and NPM to improve is that
something similar for Rathi the company is now being
steel and power going ahead. allotted captive coal linkages.
Read the full report to know If Long-term investors and
more about the same. clients of Team
StockResearchers remember
• Rathi turnover in FY08 was
one of our picks MSPL had
517 crs and 30% of it was
also moved vertically after it
trading turnover. Going
was allotted a coal block in
forward in FY09E turnover is
consortium.
730 crs. Rathi has a small
equity base of 24 crs divided • The company is getting LOA
for its captive power plant of
into 2.4 crs shares. The 0PM
is currently 4% and NPM is of 30MW and 75% of its required
quantity of 240000 tones for
1%.Expect the same to get
improved as the expansion of its sponge iron plant.
the company after an years • We expect the LOA to be
delay is now operational with announced in next 3-5
full capacity. months. Once the company
gets the coal linkages for its
sponge iron and power plant
is approved. We can expect a
vertical move in the stock.
MANDATORY DISCLOSURES:
This document is for information only and is meant for the use of the Recipient & not for circulation.
The information contained in this document has been taken from publicly available information trade
and statistical services & other sources. While the information contained herein is from sources believed to be
reliable, we do not hold ourselves responsible for its Completeness and
accuracy. All opinions and estimates included in this report constitute our judgment as of this date and are
Subject to change without notice. Investors are expected to use the information contained in this report at their
own risk. This report is not and should not be construed as an offer or the Solicitation of an offer to buy or sell any
securities. TEAM STOCKRESEARCHERS and its affiliates may act as market maker or have assumed an underwriting
position in the securities of companies discussed herein and may sell them to or buy them from
customers on a principal basis..
Financial synopsis:-
synopsis:-
BSE: 504903 NSE: N.A ISIN: INE336C01016
Industry : Steel – Rolling
Yearly Results ------------------- in Rs. Cr. -------------------

Mar '04 Mar '05 Mar '06 Mar '07 Mar '08

Sales Turnover 187.57 282.14 299.78 401.60 517.88

Other Income 0.14 0.21 0.11 0.65 0.53

Total Income 187.72 282.35 299.89 402.25 518.41

Total Expenses 183.61 275.28 282.93 383.38 494.26

Operating Profit 3.96 6.86 16.85 18.22 23.62

Profit On Sale Of Assets -- -- -- -- --

Profit On Sale Of Investments -- -- -- -- --

Gain/Loss On Foreign Exchange -- -- -- -- --

VRS Adjustment -- -- -- -- --

Other Extraordinary Income/Expenses -- -- -- -- --

Total Extraordinary Income/Expenses -- -- -- -- --

Tax On Extraordinary Items -- -- -- -- --

Net Extra Ordinary Income/Expenses -- -- -- -- --

Interest 1.01 1.23 2.70 4.88 8.93

PBDT 3.10 5.83 14.26 13.99 15.23

Depreciation 1.29 1.22 2.25 3.23 4.58

Depreciation On Revaluation Of Assets -- -- -- -- --

PBT 1.81 4.61 12.01 10.76 10.65

Tax 0.53 1.61 4.41 1.43 1.20

Net Profit 1.28 3.00 7.60 9.33 9.45

Prior Years Income/Expenses 0.29 -0.05 -- -- --

Depreciation for Previous Years Written
-- -- -- -- --
Back/ Provided
Dividend -- -- 2.00 0.50-- --

Dividend Tax -- -- -- -- --

Dividend (%) -- -- 2% 5% --

Earnings Per Share 2.71 6.37 16.14 3.84 3.89

Book Value -- -- -- 48 51.2

Equity 4.71 4.71 4.71 24.31 24.31

Reserves -- 15.27 21.93 121.99 125--

Face Value 10.00 10.00 10.00 10.00 10.00
SUMMARY
SUMMARY:
RY:-

Our research says that the reason for the down move seen in the stock
is the lackluster Opm and the selling pressure by Banks and other Ipo
investors

Use the current dip in the stock to ACCUMULATE the stock and Use
rally above 36 to make your investments Free in the company. Time
frame for
for investment should be minimum 18 months on the stock.

Research note prepared by

Vinayak,
Varun Jain.

http://www.teamsr.co.cc/

MANDATORY DISCLOSURES:
This document is for information only and is meant for the use of the
recipient & not for circulation. The information contained in
this document has been taken from publicly available information,
trade and statistical services & other sources. While the
information contained herein is from sources believed to be reliable,
we do not hold ourselves responsible for its Completeness and
accuracy. All opinions and estimates included in this report
constitute our judgment as of this date and are Subject to change
without notice. Investors are expected to use the information
information
contained in this report at their own risk. This report is not and should
not be construed as an offer or the
Solicitation of an offer to buy or sell any securities. TEAM
STOCKRESEARCHERS and its affiliates may act as market maker
or have assumed
assumed an underwriting position in the securities of
companies discussed herein and may sell them to or buy them from
customers on a principal basis.

THE STOCK IS HELD IN THE LONG TERM PORTFOLIOS OF THE

AUTHORS