Uni Abex Alloy Products

1.) Uni Abex Alloy Products is a Naterwala group co. 

2.) Co. manufactures centrifugally cast alloy steel tubes and heat resistant alloy steel castings. 

 

3.) 65% of cos. sales come from Decanter segment. Decanter is a solid liquid separation equipment used in food processing, alcohol, sewage etc. Alfa Laval is the biggest customer contributing to 33% of total sales. 

4.) Around 30% of revenues are coming from exports.

5.) The co started supplying to the decanter industry in the early part of last decade which caused sales to jump 4x during FY03-07 but as the co. reached saturation in the decanter segment, the revenues have been stagnant at around Rs.60Cr. since FY07-12.

6.) The co. is the only major Indian supplier of centrifugal alloy steel castings to the decanter industry.

7.) Iron & Steel and Petrochem sectors contribute to the remaining 35% sales. Going forward, the co. hopes to increase revenues from these segments.

8.) Although sales have remained constant since the last 5 years, the OPM has increased from single digits till FY08 to around 20% thereafter. The management claims that the increase in margins is due to cost control, process efficiencies & technical improvements. Moreover, the RoE has averaged over 25% during FY07-12.

9.) The co. owns & operates a 10 acre plant in Thane which is around 35 - 40 years old & the plant & machinery is ageing. Hence the co. has acquired a 30 acre plot in Dharwad, Karnataka & is setting up a greenfield factory with a capital outlay of Rs.44Cr.

10.) Out of the total capex of Rs.44Cr., the co. has already spent Rs.10Cr. & the remaining Rs.33Cr. will be funded through a debt of around Rs.20Cr. & the rest through internal accruals. The plant is expected to commence operations by mid 2013.

11.) The 10 acre Thane plant land is expected to fetch over Rs.100Cr. at current market prices. There is a strong chance that after 3 - 5 years, the co. might shift its manufacturing operations completely from Thane to Dharwad once the greenfield plant stabilizes.

12.) The management is not experiencing any slowdown in business due to slack  domestic & global economies. 

13.) VALUATIONS : TTM

CMP = Rs.139Cr.

MCap. = Rs.27.5Cr.

Net Sales = 64.4Cr.

EBITDA = Rs.12.45Cr.

PAT = Rs.8.2Cr.

Networth = Rs.43.8Cr.

Debt = 0

PE = 3.35x

P/B = 0.6x

EV / EBITDA = 2.2x

14.) PORTFOLIO WEIGHTAGE = 1%