19th June 2024

Rudra Global Infra Products Limited

View: Buy

CMP Rs 42.7, TP Rs 75 (in 12 to 15 months) Q4FY24 & FY24

52 wk hi/low 57/20, Mkt Cap Rs 428 crs

Result Update –

Business Background –
Rudra Global Infra Products Ltd (RGIPL) earlier known as MDICL was initially
incorporated as a private limited company in 2010 and commenced its operations from
February 2013. RIPL manufactures thermo-mechanically treated (TMT) bars and mild
steel (MS) billets. The billets are mainly used in-house for production of TMT bars, under
the RUDRA TMX brand. RIPL has facility in Bhavnagar, Gujarat, with installed capacity
of 250000 tonnes per year

RGIPL has been operational in the steel industry for more than a decade and has
established healthy relationships with both customers and suppliers. The Company
procures MS Scrap, its primary raw material from various traders and ship breakers in
Gujrat and has built a strong network of dealers and distributors in the state for sale of
TMT Bars and Billets. The company markets its products under the brand “Rudra TMX”.
The company has nearly 350 dealers throughout Gujarat and border of Gujarat and
Rajasthan

Also the location of the Billet plant & TMT Bar Plant and proposed Billet Plant is very
strategically placed since it is located at the brink of Bhavnagar-Ahmedabad Highway
Financials for Q4FY24 and FY24 –

For the Period Ended Rs Crs Q4FY24 Q4FY23 YoY % FY24 FY23 YoY%
Sales 139.16 135.78 2.49 557.03 451.95 23.25
EBIDTA 12.37 8.60 43.84 42.49 31.4 35.32
EBIDTA % 8.89 6.33 7.63 6.95
Interest 4.70 3.50 34.29 15.67 14.63 7.11
Depreaciation 1.46 1.18 23.73 5.79 5.28 9.66
Other Income 0.00 0.00 0.00 0.00
PBT 7.04 4.20 67.62 21.86 13.76 58.87
PAT 6.82 4.20 62.38 20.77 14.42 44.04
Equity Cap 50.17 25.08 50.17 25.08
EPS 0.68 0.84 2.07 2.87
Source – Co

RGIPL reported a decent set of numbers for FY24 with sales up by 23% YoY operational
EBIDTA by 35% YoY and PAT up by a solid 44% YoY. The improvement in the overall
EBIDTA was due to better product mix and better operational management of overheads
in the current year

However despite a sharp jump in PAT in FY24 the overall EPS was down to Rs 2.07 (FV
of Rs 5) from Rs 2.87 (FV Rs 5) as the company announced a 1:1 bonus issue which
increased the paid up capital to Rs 50.17 crs from Rs 25.08 crs last year. However the
D:E as on FY24 is reasonable at 1.14:1

Key Business Developments –

Steel production being a highly energy intensive industry, a significant portion of the
company’s expenses are concentrated on power. With rising tariff rates in state, the
company has planned to switch to cheaper and greener energy options

The company plans to increase its usage of renewable sources of energy to 100% of its
total energy requirement by 2029. Transitioning from conventional energy to green energy
is to be carried out in a phased manner, wherein in Phase-1 the company targets to install
20MW of solar plant/wind mill

RIGL also plans to initiate circular economy of scrap via collection and sorting, recycling
and reuse, resource efficiency and innovation and technology adoption

Being an integrated plant itself RIGL, aims at achieving operational efficiency by

minimizing its environmental impact. As a result of this integration, it uses recyclable
scrap to manufacture billets which are directly hot-rolled to manufacture TMT Bars, thus
avoiding the need for reheating billets as practiced in other conventional rolling mills this
saving energy and expensive raw materials

RGIPL has also promoted Rudra Aerospace and Defence Pvt. Ltd –

Rudra Aerospace and Defence Pvt. Ltd. is a step forward for the group to make best use
of the company’s years of expertise in iron and steel sector

Through this venture the company management wants to be part of GoI’s MAKE IN INDIA
initiative and contribute to fast developing technologically advanced engineering goods
category, mainly in the aerospace and defence sectors

Investment casting primarily involves use of metals as raw material for manufacturing
engineering goods, which owing to the ship recycling activity is easily available to the
company.

Using the most advanced global technologies the company aims to use this knowledge
of this sector to become a key player in India’s objective of becoming self-sufficient in the
specialized engineering and defence sectors going ahead
Overall industry view of the Gujarat Steel market as on date –

In 2023, the Gujarat government signed 18 memorandum of understanding (MoU) worth

US$ 1.20 billion (Rs. 9,852 crore) under the state government's 'Aatmanirbhar Gujarat
Schemes for Assistance to Industries'. It is expected to generate 10,851 employment
opportunities

Gujarat has 106 product clusters. The Cluster Development Scheme has been launched
for furthering the growth of product clusters

Gujarat ranks first in terms of total area covered under SEZs in India. It is also a leading
SEZ state with the highest geographical area of 29,423.9 hectares under SEZ
development

As per World Bank, by 2036, 600 mn (approx. 40% population) people will be living in
urban cities in India increasing the demand for clean water, reliable power supply, efficient
and safe road transport amongst others

Under the PM Awas Yojana, out of the 3 crore houses built 75 lakh houses have already
been delivered to the beneficiaries. Another 3 cr houses in rural areas have been
announced by the recently elected NDA govt in 2024 after the elections results under the
PM Awas Yojana which will further boost demand for TMT bars which is a basic building
block in construction activity going ahead

RGIPL is a manufacturer of superior quality Billets and TMT Bars. The company has
further gone in for a forward integration and set up a TMT rolling mill with an annualized
production capacity of 1,20,000MT per annum

RGIPL has expanded its operations by doubling its billet manufacturing capacity to
240000MT/annum & has used the latest Thermax Quenching System of Germany used
in the process of manufacturing TMT. Rudra TMX is a premium brand for TMT Bars in
Gujarat.

Some marquee customers include L & T, Adani, Reliance Ind, Intas, Mylan, Alembic, JK
Paper, Inox Wind, Minova, Safal & Pashwa Group, NHAI, Sanskruti Group, Dobariya
Group, TBEA Kalapi Realty etc

RGIPL has also set up multiple shoppe’s in the name of RUDRA INFRAMART-A flagship
service to provide “one stop solution” to cater to all infra needs of customers This is a
parallel network to capitalize on our established brand-RUDRA, was created where in the
company holds exclusive rights to market TMT brands, which include JB500 TMX &
TRIDEV TMX

Hence all in all we expect the Gujarat market to perform well and deliver strong volume
growth over the next 2 to 3 years ahead as many infra projects and several corporates
are also initiating capex ahead
Future Prospects ahead –

RGIPL enjoys strong revenue visibility due to its critical product execution abilities and
strong tailwinds seen from the enduser segments like Real Estate, Construction,
Engineering Sectors and Building Products where the capex cycle looks very strong
ahead

RGIPL is promoted by Mr. Ashok Kumar Gupta who has over 30 years of experience in
the steel sector and has been instrumental in setting up the manufacturing facility at
Bhavnagar. His son Late Mr. Nikhil Gupta had been associated with the company since
inception, however after his demise Mr. Sahil Gupta took over as the Managing Director
of the Company in June 2021. Mr. Sahil Gupta has over 8 years of experience in the steel
sector and looks after the overall operations of the company

TMT bars find their application in many avenues. They are used for constructing Bridges,
Dams, High-rise apartments, Industrial structures & Flyovers

The sale of construction materials including TMT bars are estimated to grow at a
Compounded Annual Growth Rate (CAGR) of 6.18% in terms of volume. Currently, the
size of the Indian construction industry is USD 2.8 billion

RGIPL has a strong base in Gujarat and caters in a small way to markets like MP and
Rajasthan but this is small as compared to its main market which is Gujarat Looking at
the massive infrastructure programmes of the Govt and strong corporate capex seen off
late we believe that RGIPL would significantly benefit from this industry tailwind over the
next 2-3 years going ahead also
Financials –

For the Period Ended FY21 FY22 FY23 FY24 FY25 FY26
Sales 238.00 351.00 452.00 557.03 696.29 905.17
EBIDTA -7.00 30.00 31.00 42.49 57.44 76.94
EBIDTA % 8.55 6.86 7.63 8.25 8.50
Interest 18.00 16.00 15.00 15.67 16.00 16.25
Depreciation 6.00 6.00 5.00 5.79 6.10 6.50
Non OP Other Income 1.00 0.00 3.00 0.00 2.00 2.00
PBT -30.00 8.00 14.00 21.86 37.34 56.19
Core PAT -30.00 8.00 14.00 20.77 30.00 42.00
Diluted EPS (Rs) FY Rs10 & Rs 5) NA 3.19 5.58 2.07 2.99 4.1858
Equity Cap 25.09 25.09 25.09 50.17 50.17 50.17
Reserves 45.00 63.00 68.00 63.27 88.27 122.27
Borrowings 176.00 135.00 115.00 130.72 115.72 125.72
Gross Block 80.16 81.63 96.63 102.68 109.68 119.68
Investments 0.00 0.00 0.00 0.00 0.00 0.00
Source Co Our Est
Business Outlook & Stock Valuation –
On a rough cut basis, in FY25E & FY26E Topline is expected to touch Rs 696 crs,
followed by Rs 905 crs in FY26E. On the bottomline level we expect the company
to record a PAT of Rs 30 crs in FY25E & which is expected to bounce back to Rs
42 crs in FY26

RGIPL enjoys strong revenue visibility due to its critical product execution
abilities and strong tailwinds seen from the enduser segments like Real Estate,
Construction, Engineering Sectors and Building Products where the capex cycle
looks very strong ahead

On a EV/EBIDTA basis the stock trades at 9x & 7x on FY25 and FY26 which looks
low for a well established player enjoying good profitability, and a strong hold in
its business segment.

The company management is confident of improving EBIDTA margins in going ahead via
operational efficiency and better pricing due to operating leverage benefits ahead

Looking at RGIPL’s steady financial track record, strong business domain and
dominant market share and strong promoters we expect the stock to get re rated
in future. Hence we believe that the RGIPL stock should be purchased at the
current price for a price target of around Rs 75 over the next 12 to 15 months

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