Ram Ratna Wires Ltd : An Attractive Stock

                            RAM RATNA WIRES LTD : An Attractive Stock

CMP : 224-228

BSE CODE :522281

Market Cap : 495 Crores

       LISTED ON : BSE

TARGET : 400

TIME-FRAME : 12 Months

History of the Company :

Ram Ratna Wires Ltd was incorporated in the year 1992 and has registered office at Mumbai, Maharashtra. It has set up manufacturing plants at Silvassa and Waghodia.

The manufacturing plants are well-equipped with modern machinery for producing quality products. All the plants are ISO 9001:2005 ,14001:2004, 18001:2007 and 50001:2011 certified. All these plants are continuously upgraded to offer quality outcome. They have an excellent safety record, making RR Kabel wires and cables toppers in their range.

Wires and cables permeate through every aspect of our modern lifestyle, which commands uninterrupted and efficient electricity supply. From planes to trains, telecommunication to entertainment , satellites to WiFi - wires are the omnipresent, unsung heroes pulsating electricity, bringing surroundings to life and bridging distances. Company's diverse product offerings are nimble and energy efficient, minimizing losses, tending security and earning user savings through every millimeter it pervades. Company has been lauded with several product and system certifications and awards that speak for quality and dependable wires, making it one of the best quality wire and cable company in India and abroad. 

Products:

• Building Wires
• Single Cores
• Control Cables
• Drag chain & Servo Cables
• Data & Communication Cables
• Appliance Wiring Material
• Instrumentation Cables
• Silicon Cables
• Auto Cables
• Fire Resistance Cables
• Power Cables
• Application Based Cables

Financials of the Company :

• Profit After Tax (PAT) for the year ended on 31st March,2017 has been reported at Rs 21.58 Crore and turnover at 801 Crore
• As per the numbers as on 31st March,2017 the company has generated Return on Equity of approx. 26% , Return on Capital Employed of 21% and Return on Assets of 17%
• Debt to Equity ratio is below 2 and is reasonable in nature
• The company is a regular dividend paying company and has paid dividend for past 10 consecutive years
• The Company has carried out a major capacity expansion in year 2016-17 and fixed asset base has increased by almost 40% during the current year. As a result,  turnover and profits are likely to increase in upcoming period.

Investment Rationale : Why to Invest in this Stock ??

• Shareholding of the promoters in the company is 73.00% as on 30th September,2017 which strongly indicates interest of promoters in growth of the company.
• The demand for cables and wires is expected to increase at a CAGR of 20% for next 5 years in India due to creation of smart cities and major expansion of cables/wires to rural areas of India. Huge market potential remains untapped for the company as majority of the sector is still unorganized. 
• Operating Cashflow positive for past 3 financial years
• Market Cap to Sales Ratio : 0.56 ( Considering March 2017 sales and current market cap) is very attractive
• At current price of 225 Rs per share and EPS of 10 Rs , the stock is presently trading at a  reasonable P/E ratio of 22.5.
• At a forward reasonable P/E of 25 and EPS of 15-20, we expect the stock price to soar higher at least to 400 and higher levels in coming time.

Disclaimer Note: The above is not a research report but information as available on public domain and it should not be treated as a research report. Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations.

Disclosure: It is safe to assume that I might have Ram Ratna Wires Ltd in my portfolio and hence my point of view can be biased. Readers should perform own due diligence before investing. We do not assume any responsibility or liability resulting from the use of information , judgments and opinions for Trading or Investment purposes on the Blog.