April 23, 2020

_____
S tock
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Mishra Dhatu Nigam (MISDHA)
CMP: | 209 Target: | 256 (22%) Target Period: 12 -18 months BUY
April 23, 2020

On strong footing....
Mishra Dhatu Nigam (Midhani), a Mini Ratna (Category – I) company, is a
leading manufacturer of special steel, super alloys & titanium alloys catering
v
to niche end-user segment like space, defence, energy, etc. Within the

Stock Tales
overall steel market, Midhani’s area of focus is on speciality steel (nickel Particulars
based alloys and speciality alloys). These alloys are used across end user Particulars Amount
applications that require reduced weight, high strength & toughness and
Market Capitalisation (in | crore) 3,970.8
high corrosion & oxidation resistance. Despite high cost when compared to
conventional steel & alloy grades, the select products are preferred for high- Debt in | crore (FY19) 106.7
end applications (space, defence, etc) where efficiency and precision is of Cash & Cash Eq. in | crore (FY19) 198.0
prime importance. Midhani is in the business of manufacturing these high- EV (in | crore) 3,879.5
value added products wherein majority of orders executed are import 52 Week H / L (|) |278/|109
substitute. Over the years, Midhani has acquired competence to develop
Equity Capital (| crore) 187.3
and manufacture customised alloys tailor-made to suit the specific
requirements of customers for their critical applications. Face Value (|) 10.0

Healthy traction in Isro budget augurs well for Midhani….

Price Performance
During FY11-20, the government’s budget allocation to Isro has increased at
a healthy pace of 13% to | 13139 crore (Revised Budget of FY20). Of this, a 270 12000
majority of increase is driven by a rise in Isro’s capital expenditure, which 240
10000
210
has augured well for speciality steel supplier like Midhani. Over the last few 180 8000
years, space segment has emerged as a key user industry that has aided the 150

ICICI Securities – Retail Equity Research

6000
company’s overall financial performance. Midhani’s space sector order book 120
90 4000
has increased from | 108 crore in FY12 to | 1280 crore in FY19. 60
2000
EBITDA margins on uptrend on higher space sector orders…. 30
0 0
Typically, for Midhani, space sector orders are higher margin orders (at

Oct-18

Oct-19
Jul-19

Jan-20
Jul-18

Jan-19
Apr-18

Apr-19

Apr-20
EBITDA level space sector margin are 2x defence). Higher proportion of
space sector orders being executed has aided Midhani’s margin expansion.
The space sector contribution in aggregate topline has steadily increased Midhani NSE500 Index (RHS)
from 5% in FY16 to 55% in H1FY20. Generally, as the space sector
commands higher operating margins, the higher contribution by the same Key Highlights
has aided in margin expansion (from 25.8% in FY19 to 29.2% in 9MFY20).  Healthy outstanding order book of |
Valuation & Outlook 1776 crore as on January 2020,
driven by strong traction witnessed
On account of its high-end speciality product basket, Midhani distinguishes
in space sector vertical
itself from a normal steel producer. Hence, unlike a commodity company,
Midhani has not witnessed cyclicality in earnings wherein (since FY15) the  Recommend BUY on stock with
company has been able to consistently report 21%+ EBITDA margins and target price of | 256
17%+ RoCE. With a healthy proportion of space sector orders in the overall
order book, we expect overall EBITDA margins to remain firm in the ~30% Research Analyst
range for the next couple of years. Going forward, in FY19-22E, we expect Dewang Sanghavi
topline, EBITDA and PAT to grow at a CAGR of 12%, 18% and 19%, dewang.sanghavi@icicisecurities.com
respectively. We value the stock at 20x FY22E EPS and arrive at a target price
of | 256. We assign a BUY rating to the stock. Key risk to our call is any
notable slowdown in space contract order inflow/execution.
Key Financial Summary
(| crore) FY18 FY19 FY20E FY21E FY22E FY19-22E CAGR ( in %)
Total Operating incme 661.7 710.8 711.4 808.7 1,004.0 12
EBITDA 190.9 183.7 209.9 240.6 301.2 18
EBITDA Margin (%) 28.8 25.8 29.5 29.8 30.0
Net Profit 131.3 130.6 156.9 178.3 217.9 19
Diluted EPS (|) 7.0 7.0 8.4 9.5 11.6
P/E 30.3 30.4 25.3 22.3 18.2
RoE (%) 16.6 15.6 17.3 17.8 19.2
RoCE (%) 19.4 17.1 18.0 19.0 21.1
s

Source: Company, ICICI Direct Research

 Stock Tales | Mishra Dhatu Nigam ICICI Direct Research

Company Background
Mishra Dhatu Nigam (Midhani) was established in 1973, with the aim of
achieving self-reliance in research, development and supply of critical alloys
and products of national security and strategic importance. Midhani is
engaged in manufacturing a wide range of special metals and alloys. The
company’s products have superior mechanical properties and better
workability, which are essential for special applications in aerospace, power
generation, nuclear, defence and other general engineering. In 2009,
Midhani was accorded Mini Ratna (Category – I) status by the Ministry of
Defence (MoD).
The company manufactures special steel like martensitic steel, ultra-high
strength steel, austenitic steel and precipitation hardening steel. The super
alloys division manufactures three kinds of super alloys – nickel based, iron
based and cobalt based. Midhani is also the sole manufacturer of titanium
alloys in India. The company has competence in developing and
manufacturing customised alloys tailor-made to suit the specific
requirements of customers for their critical applications. Midhani has several
certifications including ISO 9001:2008 – quality management system and
AS9001 C for manufacturing and supply of metals & alloy products. The
company’s research & development (R&D) laboratory is also accredited to
the National Accreditation Board for Testing and Calibration Laboratories.
Exhibit 1: Trend in revenue (| crore) & EBITDA margin (%)
1250 30.0
28.8
25.8 25.0
1000 24.0
20.8 21.1 20.0
750
(in | crore)

15.0
(%)

500
10.0
250
5.0
647 717 773 662 711
0 0.0
FY15 FY16 FY17 FY18 FY19
Source: Company, ICICI Direct Research

Exhibit 2: Trend in sales volume (in tonnes) Exhibit 3: Trend in blended realisations (in | lakh/tonne)
7000 6150 25.0
6000 5205 19.3
20.0
(in | lakhs per tonne)

4732 4477
5000 14.6 14.9
3685 13.9 13.2
15.0
(in tonnes)

4000
3000 10.0
2000
5.0
1000
0 0.0
FY15 FY16 FY17 FY18 FY19 FY15 FY16 FY17 FY18 FY19

Source: Company, ICICI Direct Research, Source: Company, ICICI Direct Research

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 Stock Tales | Mishra Dhatu Nigam ICICI Direct Research

Investment Rationale
Healthy traction in Isro budget augurs well for Midhani….
During FY11-20, the government’s budget allocation to Isro increased at a
healthy pace of 13% to | 13139 crore (Revised Budget of FY20). Of this, a
majority of the increase is driven by a rise in Isro’s capital expenditure (as
depicted in Exhibit 4), auguring well for speciality steel supplier like Midhani.
Over the last few years, the space segment has emerged as a key user
industry, which has aided the company’s overall financial performance.
Midhani’s space sector order book has increased from | 108 crore in FY12
to | 1280 crore in FY19.

Exhibit 4: Budget allocation towards Isro on uptrend… Main components of maraging steel are a) pure iron
(with nitrogen and oxygen concentration of less than
14000 20 ppm) mainly imported, b) nickel 18%, c) cobalt
12% and d) Molybdenum ~5%.
12000

10000

8000
(| crore)

6000

4000

2000

0
FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 REFY20

Source: Company, ICICI Direct Research

Generally, as the space sector commands higher operating margins, the

higher contribution by the same has aided in margin expansion (from 25.8%
in FY19 to 29.2% in 9MFY20). Majority of Midhani’s supplies to Isro within
the space sector are maraging steel (a nickel heavy alloy steel). Typically,
the orders for maraging steel are received on a nomination basis while
pricing is done by bilateral negotiation on a cost-plus basis. Generally,
Midhani commands healthy margin (above the blended average) in
maraging steel as there is a lengthy time period for joint development of
product with Isro. Hence, a higher share of maraging steel in aggregate
orders is likely to result in healthier operating margins.

Going forward, India Space Research Organisation (Isro) has slated 36

missions for the next two years. These will include milestone missions like
Chandrayaan-3 (moon lander mission) and an uncrewed mission for
Gaganyaan (human flight mission). During 2020-21, Isro has scheduled the
launch of several satellites including 10 earth observation satellites, three
communication satellites, two navigation satellites and three space science
satellites. Among rocket launches, Isro has scheduled launches of 10 PSLVs,
three GSLV MK II, and one GLSV MK III. In addition, two small satellite launch
vehicles are also planned for 2020-21. For 2019 and 2020, Isro has
successfully completed 11 out of the total targeted missions—four Earth
observation satellites, Chandrayaan-2, four PSLVs and one communications
and one space science satellite. One of the most anticipated upcoming
missions of the space agency, Gaganyaan, is scheduled for launch in 2022.
However, before that, Isro is likely to send two uncrewed missions — one
by the end of 2020 and another by mid-2021. The precursor missions are
supposed to carry a humanoid robot that will study the environment and
perform all tasks designated for humans to be conducted in orbit.

ICICI Securities | Retail Research 3

 Stock Tales | Mishra Dhatu Nigam ICICI Direct Research

Space sector contributes ~43% of total revenue in FY19…

In terms of key customers, space and defence sector are the two key The rise in capability of Vikram Sarabhai Space
verticals accounting for a lion’s share of Midhani’s topline and order book. Centre (VSSC) has aided the upsurge in space sector
Over the years, Midhani’s capability of supplying niche steel to defence order book of Midhani. VSSC is a major space
sector has been its key strength. Traditionally, the defence segment had research centre of Isro, focusing on rocket and space
been the key customer of Midhani (that includes supplies for Akash missiles vehicles for India's satellite programme
and submarines). However, post FY15, with launches by Isro gaining
traction, there has been a higher contribution by the space segment. Over
the last two to three years, Midhani has witnessed healthy traction in space
sector orders, resulting in higher execution of the same. Space sector
contribution in aggregate topline has steadily increased from 5% in FY16, to
22% in FY17, 30% in FY18 and further to 43% in FY19. Generally, as the
space sector commands higher operating margins, the higher contribution
by the same has aided in margin expansion.

Exhibit 5: Execution of space segment orders has seen Exhibit 6: …subsequently resulting in higher share of
increasing trend since FY16… contribution of space segment in overall revenue…

Order executed Share of topline

1000 100% 5%
22% 30%
750 80% 43%
60%
(| crore)

500 84%
40% 72% 58% 30%
250 20%
26%
12% 6% 12%
0 0%
FY16 FY17 FY18 FY19 FY16 FY17 FY18 FY19

Others Defence Space Others Defence Space

Source: Company, ICICI Direct Research Source: Company, ICICI Direct Research

Current order book ~2.5x FY19 topline…..

After registering a flattish trend in FY17 and FY18, Midhani’s order book
witnessed a remarkable increase in FY19 and 9MFY20, auguring well for the
company. Midhani’s order book was at | 651 crore at the end of FY17 and
| 569 crore at the end of FY18. However, since March 2018, on the back of
receipt of healthy orders from the space segment, Midhani’s order book
increased to | 1660 crore at the end of FY19 and further to | 1776 crore as
on January 2020. Currently, order book is ~2.5x FY19 topline, thereby
providing healthy revenue visibility (FY19 topline was at | 711 crore).
Exhibit 7: Upsurge in order book... Notable portion of Midhani’s capex funded by its
2000 customers, which augurs well for the company

1500

1000

500

0
FY16 FY17 FY18 FY19
Space 325 60 114 1280
Defence 551 226 385 184
Others 33 35 137 380

Others Defence Space

Source: Company, ICICI Direct Research, The Cumulative Order book as on January 2020 is |1776 crore.

ICICI Securities | Retail Research 4

 Stock Tales | Mishra Dhatu Nigam ICICI Direct Research

Healthy traction in space sector order book….

Over the last few quarters, there has been a steady increase in Midhani’s
order book driven by strong traction in the space sector. As on January 1,
2020, Midhani’s order book was at | 1776 crore. Going forward also, strong
traction is expected in the company’s order book, which will ensure healthy
revenue visibility. Of the total order book, ~| 800 crore is a one-year cycle
order book while balance ~| 800-900 crore is two-year cycle order book.
Going forward, ~| 800-900 crore of order inflow is expected every year of
which ~| 300-400 crore worth of orders are expected from the space
vertical, ~| 250-300 crore worth of orders are expected from the defence
vertical while balance orders are likely to come from others segment.
Furthermore, over the next two to three years, the management expects the
current order book of ~| 1776 crore to normalise to ~| 900 crore. This
indicates swift execution of orders in the near term.

Well-placed to capitalise on growth opportunities….

In future, Midhani plans to grow (through both greenfield & brownfield route)
based on development of technology for customers & product. It also seeks
to enter new markets of oil & gas, mining, power, railways, chemicals,
fertilisers, etc. Also, with the aim to expand its geographical presence,
Midhani is in the process of setting up two new manufacturing facilities in
Rohtak (armoured products manufacturing plant) and Nellore (Aluminium
alloy plant). Of the two new plants, the Rohtak plant would be operational
first and is likely to be fully operational by September 2020. Midhani has also
entered into collaborations with Indian & international research institutions
to gain capabilities for developing advanced technology products that will
aid import substitution.

EBITDA margins to remain flattish at ~30%…

For 9MFY20, Midhani reported an EBITDA margin of 29.0% against an
EBITDA margin of 25.8% in FY19. The increase in EBITDA margin was
primarily driven by higher proportion of space sector orders executed in
9MFY20 compared to FY19. Space segment orders generally yield higher
operating margins compared to average margins, which aided margin
expansion for Midhani. Even for the outstanding order book of | 1776 crore,
a healthy ~70% of the order book is from the space sector (Isro). While there
is a healthy proportion of space sector orders in the overall order book, we
do not expect any notable uptick in margins because of Covid-19 related
concerns, which may lead to postponement of some orders. Hence, we
expect the company to witness a flattish trend in EBITDA margins.

Exhibit 8: Trend in EBITDA margin

35.0

29.8 30.0
29.5
30.0 28.8
(in %)

25.8

25.0

20.0
FY18 FY19 FY20E FY21E FY22E

Source: Company, ICICI Direct Research

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 Stock Tales | Mishra Dhatu Nigam ICICI Direct Research

Covid-19 related issues to postpone order execution….

In view of the global outbreak of Coronavirus Disease (Covid-19), Midhani
had received directives from Department of Public Enterprise (DPE) to
operate with skeletal staff between March 23, 2020 and March 31, 2020. The
company being a central public sector enterprise is complying with the
above directives issued by DPE. The Covid-19 lockdown impacted the final
testing, certification and shipment of materials in March 2020, thereby
impacting Midhani’s Q4FY20 performance. Hence there would be some
postponed of orders, which would spill over. With the lockdown being
extended till May 4, 2020, we expect Midhani’s H1FY21E performance to
also be soft as post lifting of lockdown there is likely to be a gradual pick-up
in order execution.

On account of Covid-19 related issues, the topline is likely to be flattish YoY

for FY20 (vis-à-vis FY19), against 37% YoY growth till 9MFY20. In a normal
scenario, the company would have grown at a healthy pace (as witnessed
in 9MFY20). However, Covid -19 related concerns have slowed down its
growth trajectory. Furthermore, even though 70% of Midhani’s order book
is skewed towards the space sector (which is generally higher margin), we
expect blended EBITDA margins to remain flattish, on expectations of a
muted H1FY20.

Nalco-Midhani JV to set up high-end aluminium alloy plant

Nalco has entered into a pact with Midhani to incorporate a joint venture to
set up a high-end aluminium alloy plant. The plant is expected to be
operational in the next four to five years and is likely to have a capacity of
~60000 tonnes. The blended per tonne realisation is expected to be in the
range of ~| 400000 per tonne and is likely to cater to demand from railways,
defence, aerospace and auto sector. Currently ~30000-35000 tonnes is
imported in this category. By the time the plant gets commissioned, overall
demand is likely to go up to 130000 tonnes. With regard to funding, the
company may get a third party if it agrees to come for a small stake. It is also
exploring an option to fund through compulsory convertible debentures
(CCD)/normal debt from banks, in which case third party funding will not be
required.

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 Stock Tales | Mishra Dhatu Nigam ICICI Direct Research

Financial story in charts

Exhibit 9: Trend in total operating income (in | crore)
1250
1004
1000
809
711 711
750 662
(in | crore)

500

250

0
FY18 FY19 FY20E FY21E FY22E
Source: Company, Reuters, ICICI Direct Research

Exhibit 10: Trend in EBITDA (in | crore)

350
301
300
241
250
210
191 184
(in | crore)

200

150

100

50

0
FY18 FY19 FY20E FY21E FY22E
Source: Company, ICICI Direct Research

Exhibit 11: Trend in net profit (in | crore)

250
218

200
178
157
150 131 131
(in | crore)

100

50

-
FY18 FY19 FY20E FY21E FY22E
Source: Company, ICICI Direct Research

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 Stock Tales | Mishra Dhatu Nigam ICICI Direct Research

Exhibit 12: Valuation Matrix

Years Total Op Income Growth EPS Growth PE EV/EBITDA RoNW RoCE
(| cr) (%) (Rs) (%) (x) (x) (%) (%)
FY18 661.7 -14.4 7.0 3.9 30.3 20.4 16.6 19.4
FY19 710.8 7.4 7.0 -0.5 30.4 21.1 15.6 17.1
FY20E 711.4 0.1 8.4 20.2 25.3 18.2 17.3 18.0
FY21E 808.7 13.7 9.5 13.7 22.3 15.9 17.8 19.0
FY22E 1004.0 24.1 11.6 22.2 18.2 12.8 19.2 21.1
Source: Company, ICICI Direct Research

Exhibit 13: Top 10 Shareholders

Rank Name Latest Filing % O/S Position (m) Change (m)
1 Government of India 30-06-2019 74.0 138.6 0.0
2 HDFC Asset Management 31-12-2019 7.2 13.4 0.6
3 Life Insurance Corporation 30-06-2019 6.6 12.3 -1.7
4 Reliance Capital Trust 31-12-2019 3.3 6.1 0.0
5 Invesco India Asset 31-12-2019 2.9 5.4 0.3
6 New India Assurance 30-06-2019 1.3 2.4 0.0
7 General Insurance Co. 30-06-2019 1.1 2.1 0.0
8 Van Eck Associates 23-01-2020 0.1 0.2 0.0
9 Dimensional Fund Adv. 30-11-2019 0.0 0.0 0.0
10 ICICI Prudential Assets. 31-12-2019 0.0 0.0 0.0
Source: Reuters, ICICI Direct Research

Exhibit 14: Shareholding pattern

Source: Company, ICICI Direct Research

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 Stock Tales | Mishra Dhatu Nigam ICICI Direct Research

Financial summary

Exhibit 15: Profit and loss statement | crore Exhibit 16: Cash flow statement | crore
(Year-end March) FY19 FY20E FY21E FY22E (Year-end March) FY19 FY20E FY21E FY22E
Total Operating Income 711 711 809 1,004 Profit/(Loss) after taxation 131 157 178 218
Growth (%) 7% 0% 14% 24% Add: Dep. & Amortization 23 27 30 39
EBITDA 184 210 241 301 Net (Inc) / dec.in Current Asset (281) (3) (126) (180)
Growth (%) -4% 14% 15% 25% Net Inc / (dec) in Current Liab. 95 43 78 95
Interest & Finance Cost 6 5 5 5 CF from Operating Actv. (32) 224 161 173
Depreciation 23 27 30 39 (Inc)/dec in Investments - - - -
Other Income 37 32 33 34 (Inc)/dec in Fixed Assets (214) (225) (200) (200)
PBT before Exceptional Items 191 210 238 291 Others - - - -
Less: Exceptional Items 0 0 0 0 CF from Investing Actv. (214) (225) (200) (200)
PBT 191 210 238 291 Inc / (Dec) in Equity Capital - - - -
Total Tax 60 53 60 73 Inc / (Dec) in Loans 14 - - -
PAT 131 157 178 218 Dividend & Dividend Tax (85) (84) (84) (84)
Growth (%) -1% 20% 14% 22% Others 336 156 102 100
EPS 7.0 8.4 9.5 11.6 CF from Financing Actv. 264 72 18 16
Source: Company, ICICI Direct Research Net Cash flow 18 71 (21) (11)
Opening Cash 180 198 269 248
Closing Cash 198 269 248 236
Source: Company, ICICI Direct Research

Exhibit 17: Balance sheet | crore Exhibit 18: Key ratios | crore
(Year-end March) FY19 FY20E FY21E FY22E (Year-end March) FY19 FY20E FY21E FY22E
Equity Capital 187 187 187 187 Per share data (|)
Reserve and Surplus 647 720 814 948 EPS 7.0 8.4 9.5 11.6
Total Shareholders funds 835 907 1001 1135 BV 44.6 48.4 53.4 60.6
Total Debt 107 107 107 107 DPS 3.8 3.8 3.8 3.8
Other Non-Current Liabilities 416 566 666 766 Cash Per Share 10.6 14.4 13.2 12.6
Deferred Tax Liability (net) 40 45 51 59 Operating Ratios (%)
EBITDA margins 25.8 29.5 29.8 30.0
Source of Funds 1397 1625 1826 2067 PBT margins 26.9 29.5 29.5 29.0
Net Profit margins 18.4 22.1 22.0 21.7
Gross Block - Fixed Assets 499 674 749 974 Inventory days 261 260 260 250
Accumulated Depreciation 74 101 131 170 Debtor days 181 175 175 160
Net Block 425 573 618 804 Creditor days 66 60 60 60
Capital WIP 175 225 350 325 Return Ratios (%)
Net Fixed Assets 600 798 968 1129 RoE 15.6 17.3 17.8 19.2
Investments 2 2 2 2 RoCE 17.1 18.0 19.0 21.1
Inventory 509 507 576 688 RoIC 21.6 24.6 24.5 26.1
Cash 198 269 248 236 Valuation Ratios (x)
Debtors 352 341 388 440 P/E 30.4 25.3 22.3 18.2
Loans & Advances & Other CA 105 121 130 146 EV / EBITDA 21.1 18.2 15.9 12.8
Total Current Assets 1164 1237 1342 1510 EV / Revenues 5.5 5.4 4.7 3.8
Creditors 129 117 133 165 Market Cap / Revenues 5.6 5.6 4.9 4.0
Provisions & Other CL 299 353 415 478 Price to Book Value 4.8 4.4 4.0 3.5
Total Current Liabilities 427 470 548 643 Solvency Ratios
Net Current Assets 736 767 793 866 Debt / Equity 0.1 0.1 0.1 0.1
Other Non-current assets 59 58 62 70 Debt/EBITDA 0.6 0.5 0.4 0.4
Current Ratio 2.7 2.6 2.4 2.3
Application of Funds 1397 1625 1826 2067 Quick Ratio 1.5 1.6 1.4 1.3
Source: Company, ICICI Direct Research Source: Company, ICICI Direct Research

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 Stock Tales | Mishra Dhatu Nigam ICICI Direct Research

Annexure

Exhibit 19: Overview of application of speciality steel

Select High Value Speciality
Key End User Segment Application Area
Steel Grades
• Aeronautical • Landing Gears
• Defence • Suspension Systems
Nickel Alloy
• Auto Components • Braking Systems
• Industrial Machinery • Crankshafts, Gears, Castings
• Defence Vehicles for combat • Ceilings
High Strength Armour Grades • Armoured Vehicles • Walls
• SWAT Vehicles • Doors
• Aerospace
• Valve Parts
• Consumer Durables
• Multi-purpose tools
Martensitic Stainless Steel • Medical
• Surgical Instruments
• Chemical
• Shears
• Tools & Machineries

• Aerospace • Exhaust Systems

• Automotive • Automotive Exhaust Systems
• Oil & Gas • Heat Exchangers
Ferritic Stainless Steel
• Chemical Plants • Furnace Combustion
• Power Plants Chamber
• Processing Industries • Chemical and oil refinery

• Automotive
• Automotive Trim
• Food Processing
Asutenitic Stainless Steel • Food & Beverage Equipment
• Chemical
• Process Equipment
• Pharmaceuticals

• Aerospace • Exhaust Systems

• Oil & Gas • Oil Patch
Precipitation Hardening Steel (PH)
• Power Plants • Pump Shafts
• Chemical Plants • Mechanical Seal
Source: Company, ICICI Direct Research

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Exhibit 20: Overview of application of superalloys

Super Alloy Grades Key End User Segment Application Area
• Jet Engine components
• Air frames
• Aeronautical
• Gas turbines
• Power Plants
Nickel Based Super Alloy • Combusters
• Oil & Gas
• Heat exchanger tubing
• Chemical Plants
• Pump Motor Shaft
• Cyrogenic tanks
• Processing Equipment
• Processing Industries
• Pre & Super Heaters
• Chemical Plants
• Steam boilers
Iron Based Super Alloy • Power Plants
• Piping applications
• Industrial Machineries
• Industrial furnaces
• Oil & Gas
• Valves & Fittings
• Aerospace • Navigating Systems
• Defence • HV Transmission Lines
• Electric Appliances • Heaters
Nickel - Iron Based Super Alloy
• Power • Composite Moulds
• Industrial Machineries • Electric Furnace
• Consumer Durables • Electronic Housings
• Aerospace Fasteners
• Aerospace
• High Temp Discs
• Defence
Nickel - Chromium - Cobalt Alloy • High Temp Springs
• Power Plants
• Turbine Blades
• Automotive
• Exhaust re-heaters
• Aerospace • Electronic Instruments
• Defence • Electric Motor Parts
Iron - Cobalt Alloy
• Consumer Durables • Electronic Appliances
Soft Magnetic Alloy
• Industrial Machineries • Sonar Applications
• Power Stations • Ultrasonic Equipments
Source: Company, ICICI Direct Research

Exhibit 21: Overview of application of titanium alloys

Titanium Alloy Grades Key End User Segment Application Area
• Aerospace
• Aircraft Engine parts
• Defence
• Aerospace exhaust system
• Marine Applications
• Chemical desalination
• Power Plants
• Process Equipment
Nickel Based Super Alloy • Oil & Gas
• Marine components
• Chemical Plants
• Steam turbine blades
• Pharmaceuticals
• Structural forgings
• Medical
• Cryogenic parts
• Processing Industry
Source: Company, ICICI Direct Research

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RATING RATIONALE
ICICI Direct endeavors to provide objective opinions and recommendations. ICICI Direct assigns ratings to its
stocks according to their notional target price vs. current market price and then categorizes them as Buy, Hold,
Reduce and Sell. The performance horizon is two years unless specified and the notional target price is defined
as the analysts' valuation for a stock
Buy: >15%
Hold: -5% to 15%;
Reduce: -15% to -5%;
Sell: <-15%

Pankaj Pandey Head – Research pankaj.pandey@icicisecurities.com

ICICI Direct Research Desk,

ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
Mumbai – 400 093
research@icicidirect.com

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 Stock Tales | Mishra Dhatu Nigam ICICI Direct Research

ANALYST CERTIFICATION
RATING RATIONALE
I/We, Dewang Sanghavi MBA (Finance) Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s)
or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. It is also confirmed that above mentioned Analysts of this report
ICICI Direct endeavors to provide objective opinions and recommendations. ICICI Direct assigns ratings to its
have not received any compensation from the companies mentioned in the report in the preceding twelve months and do not serve as an officer, director or employee of the companies mentioned in the report.
stocks according to their notional target price vs. current market price and then categorizes them as Buy, Hold,
Reduce and Sell. The performance horizon is two years unless specified and the notional target price is defined
Terms
as the & conditions
analysts' andforother
valuation disclosures:
a stock
Buy: >15%
ICICI Securities Limited (ICICI Securities) is a full-service, integrated investment banking and is, inter alia, engaged in the business of stock brokering and distribution of financial products. ICICI Securities Limited is a SEBI registered
Research Analyst with SEBI Registration Number – INH000000990. ICICI Securities Limited SEBI Registration is INZ000183631 for stock broker. ICICI Securities is a subsidiary of ICICI Bank which is India’s largest private sector bank
Hold: -5% to 15%;
and has its various subsidiaries engaged in businesses of housing finance, asset management, life insurance, general insurance, venture capital fund management, etc. (“associates”), the details in respect of which are available on
www.icicibank.com

Reduce: -15% to -5%;

ICICI Securities is one of the leading merchant bankers/ underwriters of securities and participate in virtually all securities trading markets in India. We and our associates might have investment banking and other business relationship
with a significant percentage of companies covered by our Investment Research Department. ICICI Securities generally prohibits its analysts, persons reporting to analysts and their relatives from maintaining a financial interest in the
Sell: <-15%
securities or derivatives of any companies that the analysts cover.

Recommendation in reports based on technical and derivative analysis centre on studying charts of a stock's price movement, outstanding positions, trading volume etc as opposed to focusing on a company's fundamentals and, as
such, may not match with the recommendation in fundamental reports. Investors may visit icicidirect.com to view the Fundamental and Technical Research Reports.

Our proprietary trading and investment businesses may make investment decisions that are inconsistent with the recommendations expressed herein.

ICICI Securities Limited has two independent equity research groups: Institutional Research and Retail Research. This report has been prepared by the Retail Research. The views and opinions expressed in this document may or may
not match or may be contrary with the views, estimates, rating, target price of the Institutional Research.

The information and opinions in this report have been prepared by ICICI Securities and are subject to change without any notice. The report and information contained herein is strictly confidential and meant solely for the selected
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endeavour to update the information herein on a reasonable basis, ICICI Securities is under no obligation to update or keep the information current. Also, there may be regulatory, compliance or other reasons that may prevent ICICI
Securities from doing so. Non-rated securities indicate that rating on a particular security has been suspended temporarily and such suspension is in compliance with applicable regulations and/or ICICI Securities policies, in
circumstances where ICICI Securities might be acting in an advisory capacity to this company, or in certain other circumstances.
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This report is based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. This report and information herein
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and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and opinions expressed in this report may not be suitable for all investors, who
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ICICI Securities or its associates might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any other assignment in the past twelve months.
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ICICI Securities or its associates might have received any compensation from Mumbai – 400in the
the companies mentioned 093report during the period preceding twelve months from the date of this report for services in respect of managing or co-
managing public offerings, corporate finance, investment banking or merchant banking, brokerage services or other advisory service in a merger or specific transaction.
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ICICI Securities encourages independence in research report preparation and strives to minimize conflict in preparation of research report. ICICI Securities or its associates or its analysts did not receive any compensation or other
benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither ICICI Securities nor Research Analysts and their relatives have any material conflict of
interest at the time of publication of this report.

Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions.

ICICI Securities or its subsidiaries collectively or Research Analysts or their relatives do not own 1% or more of the equity securities of the Company mentioned in the report as of the last day of the month preceding the publication of
the research report.

Since associates of ICICI Securities are engaged in various financial service businesses, they might have financial interests or beneficial ownership in various companies including the subject company/companies mentioned in this
report.

ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report.

Neither the Research Analysts nor ICICI Securities have been engaged in market making activity for the companies mentioned in the report.

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ICICI Securities | Retail Research 13