I strongly beleive that its time that we look into cyclicals and today i am writing about a company from steel sector. GPIL is the flagship company of Raipur based HIRA Group .This is one of the very few companies in steel sector operating in the entire value chain which includes sponge iron, billets, Ferro alloys, captive power, wires rods, steel wires, fly ash brick..etc.The company showed a growth in topline at a CAGR in revenues of 19.49% and EBIDTA 12.58% over the five years leading to 2012-13.This company is not spending a single rupee for purchasing power from outside .It is fully backed by captive power production facilities and also selling excess power to others .GPIL also having captive mining facilities from two mines allotted for them which is minimizing the uncertainties related with iron ore supply.
The company is focussing on high margin steel business and is into pelletization.In the month of September,they commissioned 1.2 mtpa plant for the same.This is in addition to the 0.6 mtpa plant that the company already had. So the total capacity now stands at 1.8mtpa. The company also commissioned 50 MW solar power plant last month.
GPIL has adopted various cost-cutting technologies. The use of coal in gasifier for pellets in place of costly ignite oil is one of those initiatives, which would save around Rs1.5bn for the 1.8mtpa pellet plant. Moreover, the company has indicated a peak debt of Rs16.5bn, majority of which has already been drawn in FY13. The management has clarified that there wont be any new capacity addition.So the debt in company's books can easily be payable using the cash flow from business
On 25th June, 2012,the Company issued 50,00,000 equity share warrants on preferential basis to M/s Hira Infra-Tek limited (hITl), a promoter group Company, at a price of `130/- per share convertible into one
equity share of `10/- each within a period of 18 months from the date of allotment. hITl has exercised the right for conversion of 10,00,000 warrants into 10,00,000 equity shares of `10/- each as of March 31st 2013.This shows the confidence of promoters in their company.
For the financial year ended march 2013,the company reported an eps of 46 Rs. The company has also been a regular dividend payer and paid 2.5 rs last year.The company has been outperforming its peers for more than 2 years now in terms of perfomance while its share price has remained at almost at the same level.At the cmp of 81 rs,it can be added to the core portfolio as the best bet from steel sector.Any turnaround in the sector outlook will boost the share price
I have noticed some similarities between your blog and value- pick blog...All of your recommendation we have seen before in value-pick blog ..or porinju veliyath already covered it......
ReplyDeleteYou have noticed something correct. I read Valuepick blog and i am a great fan of porinju sir's stock picking. But i also read other blogs.The ideas are taken from various persons i admire and i write my own view on it.In the post of Selan Oil i have clearly mentioned that investors like porinju veliyath and ashish chugh has interests in it.If you have noticed,delta corp and vmart were not covered by porinju sir or valuepick blog. tv 18 was an idea given by safir bhai.I have been owning acrysil from 2009(idea by ashish chugh),i got more conviction once ayush bhai wrote about it in his blog.Gpil idea i got from mudar patherya and valuepick(but i waited for a correction).finolex was not only recomended by porinju(he recomended it at 60 levels 2 years back) it was also suggested by emaky recently.i dont like infra companies like mcnally bharat given by porinju.but i like muthoot idea of him and dhfl idea of value pick.i have both in my portfolio.I like companies like MCX,Tech Mahindra,Ashiana housing etc which i am not sure if they are liking.The ideas are taken from different sources but i have my own views on them..Its not a cut copy paste...Am glad that some people are reading my blog
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