Electrosteel Castings Limited (ECL) is a water infrastructure company providing techno-economic solutions for water supply and sewerage systems. The Company is India’s largest manufacturer, and one of the few manufacturers in the world, of ductile iron (“DI”) spun pipes. Lack of safe drinking water and proper sanitation is a major problem in India, and the demand for safe drinking water is increasing at a rapid pace. In order to transport sufficient quantities of water from different sources, i.e. rivers, lakes or wells, to a treatment plant with minimal loss and then transport the treated water to the end-user, a reliable pipe material is required that is strong, long-lasting, corrosion resistant and reduces the risk of contamination. DI pipes possess these qualities and are currently the single most widely used type of pipe for the transportation of water and sewage.. The company is headquartered at Kolkata and having their manufacturing facilities at Elavur in Tamilnadu, Khardah and Haldia in West Bengal.Electrosteel Castings Ltd was incorporated in the year 1955.
Website : http://www.electrosteel.com
Recently 2,54,50,414 equity shares were allotted on preferential basis to two foreign investors @ Rs.38/- per share. This company at current market price has dividend yield of 3% available at Price to book value of 0.94. Given the government thrust on rural spend and increased budget allocation on various schemes like NREGS.
Overall looking at key financial ratio this is a good value pick in midcap and theme on rural infrastructure. In the long run 2 years it would be a multibagger.
NOTE: It is safe to assume I have vested interest in the stock and standard disclaimers apply
Key Financial Ratios
| Rs. in Cr. | Mar-09 | Mar-08 | Mar-07 | Mar-06 | Mar-05 |
| Share Capital | 28.73 | 28.05 | 20.76 | 20.76 | 16.19 |
| Reserves & Surplus | 1,372.27 | 1,166.22 | 801.56 | 752.02 | 536.28 |
| Face Value | 1.00 | 1.00 | 10.00 | 10.00 | 10.00 |
| Equity Dividend (%) | 136 | 125 | 125 | 125 | 125 |
| Earning Per Share (Rs.) | 4.48 | 1.77 | 48.69 | 35.76 | 52.96 |
| Book Value | 44.21 | 41.38 | 396.11 | 372.24 | 341.24 |
| Q on Q Sales Growth (%) | -26.53 | Q on Q Net Profit Growth (%) | 27.64 | |
| 3 Yr CAGR Sales (%) | 24.66 | 3 Yr CAGR Profit (%) | 24.6 | |
| Debt to Equity Ratio (x) | 0.75 | Net Profit Margin (%) | 6.95 | |
| Promoter Shareholding (%) | 45.57 | FII Shareholding (%) | 3.41 | |
| Return on Equity (%) | 9.83 | EV to EBITDA (x) | 6.23 |
| CMP | 41.5 | * P/E | 7.09 | |
| * EPS (TTM) | 5.85 | Industry P/E | 9.01 | |
| * Price/Book | 0.94 | Div Yield(%) | 3.01 |
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