Manaksia Coated Metals & Industries Ltd :539046 FV Rs-1 : Buy at CMP of Rs 7.5-7.9 for long term returns

The Company was the wholly-owned subsidiary of Manaksia Limited in the past. After going through demerger Pursuant to Scheme of Arrangement as sanctioned by the Hon’ble Calcuttaa High Court, the Coated Metal undertaking and Mosquito Coil undertaking of Manaksia Limited has been transferred to Manaksia Coated Metals & Industries Limited. It is now separately listed at BSE and shares have face value of Rs 1.

 The Company is currently carrying on the Coated Metal and Mosquito Coil business. Business of Company mainly consists of Colour Coated (Pre-painted) Steel and Aluminium Sheets and Coils and Household Products as Domestic Insecticides in the form of Mosquito Repellent Coils and Vaporizers. Metal consists of 85% of revenue and balance 15% comes from mosquito repellent division.

Mosquito Coils:

The demand for mosquito repellent coils is understood to be growing fast in the rural areas, whereas in urban areas the vaporizers and aerosols are replacing coils. In the rural markets, the dominant products are again coils. The recent introduction of Low Smoke Coils, popularly known as Black Coils has been gaining momentum and it has created a niche segment of almost 12% of total market. with a combined manufacturing capacity of 1859 Million Pieces annually, at four different locations in India:

1.        Bollaram, Medak, Telangana

2.        Mandideep, Raisen, M.P

3.        Kamrup, Guwahati, Assam

4.        Bakura, West Bengal

They had tied up in past  for the manufacturing of mosquito coils  with Reckitt Benckiser (India) Ltd. that ensured complete mosquito coil buy back of entire mosquito coil production under their brand name "MORTEIN".

Pre Painted Metal Coils

Coil coating has revolutionized architectural and industrial design. It is a high performance technique for applying a continuous coating to sheet metal, which results in vivid look while the base metal exhibits higher durability even in tough weathering conditions. Advanced processing and coating techniques ensure that the coating adheres firmly to the base metal and does not peel off during roll forming, bending or any other process Uniform thickness of the coating, extra smooth surfaces, availability in attractive colors and value for money make Manaksia’s product range truly valuable in comparison with any conventional product.

 Company, is also exploring the opportunities to diversify into the new business relating to agri products/forest products, commercial, natural and man-made fi bres, and yarns .

Industrial Castings.
Manaksia Coated Metals and Industries Ltd. has entered into the engineering industry by setting up a Steel Foundry near Kutch District, Gujarat. It is well connected by road, rail and sea, being just 40 KM away from the port city of Kandla. State-of-art eco friendly foundry with CO2 and No Bake process methods to manufacture high quality castings. It has installed capacity to produce single piece casting weighing from 200Kgs to 5000 Kgs catering to petrochemical, oil, gas, power, mining, steel, cement, OEM’s, transport and engineering industries.

Financials Of Company:

	2016	2015
Revenue	224.01	215.25
Other Income	4.34	2.54
Total Income	228.35	217.79
Expenditure	-211.71	-207.82
Interest	-4.19	-5.43
PBDT	12.44	4.54
Depreciation	-9.88	-15.28
PBT	2.57	-10.74
Tax	0.35	3.37
Net Profit	2.92	-7.37
Equity	6.55	6.55
EPS	0.45	-1.13
CEPS	1.95	1.21
OPM %	7.43	4.63
NPM %	1.3	-3.43

Investment Positives

1.        Book value Rs 12

2.        Market cap 50-52 crores against annual turnover of 228 crores

3.        90% of share holding with promoters (65%) and HNI(25%)

Target price: With growth in economy the metal  coated products and industrial casting business could see huge increased demand. Company became profitable last year with strong improvement in EBIDTA. With continued improvement in margins It can easily deliver EPS of Rs.90 in 2016-17 and share can touch Rs 13 in 1 year and Rs 20 in 2 years. Long term investor can invest and accumulate shares on dips  for decent appreciation.