RCI In­dus­tries & Tech­nolo­gies Ltd

(BSE Code: 537254) (CMP: Rs.175.45) (FV: Rs.10)

Money Times - - Smart Picks Stock Pick - By VikasKhan­del­wal

In­cor­po­rated in 1992, Delhi-based RCI In­dus­tries & Tech­nolo­gies Ltd (RCI) of­fers and ex­ports Cop­per Wires in­clud­ing An­nealed Cop­per Wires, Bunched Cop­per Wire Ropes and Cop­per In­gots, which are used in var­i­ous elec­tri­cal and in­dus­trial ap­pli­ca­tions. With over 25 years of ex­pe­ri­ence in this busi­ness, RCI is an estab­lished name in the In­dian Hand­i­crafts in­dus­try es­pe­cially hand­i­crafts made from Cop­per and Brass me­tals. It of­fers a wide range of cus­tom­ized prod­ucts that cater to the re­quire­ments of var­i­ous man­u­fac­tur­ing units, au­to­mo­bile and engi­neer­ing in­dus­tries. RCI’s man­u­fac­tur­ing units are lo­cated in a tax and ex­cise duty ex­emp­tion zone at Nala­garh and Baddi in Hi­machal Pradesh. Cur­rently, its Baddi plant has a ca­pac­ity of 3,000 TPA for flat prod­ucts and is fully op­er­a­tional. The Com­pany plans to ex­pand this fa­cil­ity, where-af­ter its to­tal in­stalled ca­pac­ity will stand at 24,000 TPA for cop­per and cop­per al­loys/ brass/ strips/ foils/ coils/ wires, etc. Fur­ther, it re­cently pur­chased ad­di­tional fac­tory land (7,749 sq.mtrs) and a fac­tory build­ing in Baddi. The Com­pany’s ex­pan­sion plans are on track and are ex­pected to be com­pleted by the end of FY18.

RCI's prod­ucts have var­i­ous ap­pli­ca­tions and are used as con­nec­tors, ra­di­a­tors, bulb and lamp caps, im­i­ta­tion jew­ellery, eye­lets, thim­bles, clocks, pens and var­i­ous sheet me­tal pressed com­po­nents. Other uses in­clude all elec­tronic ap­pli­ances and goods, PCB (printed cir­cuit board), mo­biles, etc.

RCI posted ex­cel­lent re­sults for Q4FY17 and FY17. For FY17, RCI’s turnover grew 37% YoY to Rs.17348.3 mn from Rs.12701.9 mn in FY16. EBITDA soared 84% to Rs.546 mn from Rs.296 mn while PAT zoomed 140% to Rs.358.3 mn from Rs.149.3 mn in FY16. On an eq­uity cap­i­tal of Rs.134.4 mn, it posted an EPS of Rs.26.7 v/s Rs.13.7 in FY16. ROE and ROCE stood at 25% and 24% re­spec­tively and we ex­pect these num­bers to im­prove fur­ther going for­ward. Dur­ing Q4FY17, it achieved a turnover of Rs.5427.9 mn (up 15% YoY and 42% QoQ). EBITDA zoomed 231% YoY to Rs.281 mn from Rs.85 mn while EBITDA mar­gin ex­panded by 336 bps to 5.15%. PAT zoomed 293% YoY to Rs.227.8 mn from Rs.57.9 mn in Q4FY16 while PAT mar­gin ex­panded by 296 bps to 4.2%.

We ex­pect RCI to achieve a turnover of Rs.2100 crore in FY18 and Rs.2600 crore in FY19 with PAT of Rs.47 crore in FY18 and Rs.60 crore in FY19 thus notch­ing an EPS of Rs.34 and Rs.44 re­spec­tively. Going for­ward, the Com­pany plans

to raise its pro­duc­tion ca­pac­ity through ac­qui­si­tion and ca­pac­ity en­hance­ment. It aims to in­crease rev­enue and im­prove mar­gins post ex­pan­sion. It also plans to in­tro­duce new high-value prod­ucts for sup­ply to the De­fence seg­ment. The over­all out­look for the Com­pany is pos­i­tive con­sid­er­ing that the de­mand for cop­per is ex­pected to grow 9-10%. The ma­jor con­sumers of cop­per prod­ucts are build­ing & con­struc­tion, engi­neer­ing, trans­port and con­sumer durables. Over 30% of In­dia’s cop­per de­mand comes from the tele­com sec­tor and 26% from the elec­tri­cal sec­tor. A con­ser­va­tive for­ward P/E of 10x on FY18E EPS of Rs.34 will take its share price to Rs.340 in the next 12-18 months, which is al­most 100% ap­pre­ci­a­tion from the cur­rent level.

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.