RAM RATNA WIRES LTD (BSE:522281) FV RS.5 CMP 68.00
Company : Ram Ratna
Wires, headed by Shri Rameshwarlal Kabra having experience of near 48 years in
enameled copper winding wire and cable industry, with its leading and trusted brand
in winding wires, RR Shramik is the leading manufacturer and suppliers of winding
wire in the electrical equipment industry both national and international
market, including, Gulf, Africa and Europe. The products of the company are
utilized in various equipment including transformers, cables, transmission
lines, switchgear, capacitors etc. The company has Joint Venture at
Bangladesh with RR-Imperial Electricals Limited which would manufacture
Enamelled Copper Wire, Cables and Enamelled Strips and have 10% stake in JV and
company also hold 2.15% of RR Kabel Ltd.
Products : The Product
line includes sixteen products that broadly fall into five groups i.e.
Enamelled Copper Wire (ECW), Enamelled Copper Strips (ECS), Submersible Winding
Wire (SWW), Bare Copper Strips (BCS) and Enamelled Aluminium Wire (EAW), fiber
glass covered strips and enamelled fiberglass covered and varnished strips. The
end products meet all of the well-known Indian and international standards
including IS, IEC, JS and NEMA. The company operate in the transmission and
distribution (T&D) industry, and it is the first choice for large Original
Equipment Manufacturers (OEMs) and top electrical companies of India as well as
MNCs. Through dealer-market nationwide, the company also cater to thousands of
small manufacturing and repairing units of electrical equipment in the country,
thus company has equal share of organized and un-organized sector spread across
the country. The Company continues to develop value added products like corona
resistant wires, triple insulated wires as per customer’s requirements, keeping
pace with developments across the world.
Production & Technology : The state of the art production facilities spread across two units located at Silvassa, equipped with
the latest machinery have the expertise in manufacture of winding wire of all
types – Copper and Aluminium, round and rectangular. The production systems are
often customized to the client needs. The company is focused on production of
more value added items like enamelled aluminum winding wire, fiberglass
insulated wires & strips and paper covered wires & strips which have
also shown substantial increase in production, compared to that of previous
years. Even though an economic slowdown has
plagued the power sector recently, company had a record production over the
last couple of years. Future expansion plans are in the pipeline to meet the
growing potential in the industry.
The Company has developed, processed and supplied the
high tech products like corona resistant enameled wires as per RDSO
specification. This product has the capacity to safeguard the electrical
equipment from the danger of premature burning of coils of equipment like
Motors which are fed from inverter. Likewise, triple insulated wires
manufactured as per Japanese specification (JIS :3005) and UL safety Standards
60950 is ideal for items like power supply units of in Electrical &
Electronic equipment.
Sector Outlook : The
demand for winding wire is directly linked with the growth in power sector,
Both Hydrocarbon based as well as Green and Clean Power. The Union budget for
the financial year 2016-2017 focus on accelerated growth within power sector
with increased outlay of the tune of ` 79,884 crores. This combined with
programs like “Make in India” and “Skill India” will give a big boost to
domestic production of Electrical & electronic equipment and hence greater
demand for winding wires is expected.
Winding wires & strips form a very important segment
of Indian Electrical Equipment Industry which includes both power generation,
Transmission and Distribution (T&D) equipment. If the coil of any
electrical equipment like Generator, Motor, Transformer, Relay or Switchgear,
Domestic appliances etc. burns or fails, the equipment is dead and hence,
winding wire/strip is often known as the “Heart” of the equipment. It is used
in all sectors namely Railways, Defence, Agriculture, Infrastructure etc. of
Indian economy.
Valuation : This
closely held company with 73% promoter stake and having book value of 35 Rs, dividend
payout ratio of 21.62%, TTM Sales of over 700 Cr, ROE of 15.63% and ROCE of
16.95%, with improving OPM and profits in coming quarters the ROE and ROCE will
only improve. Falling copper price and weak USD to benefit the company as
copper is the main Raw material of which 32.74% of the total consumption is
imported by the company alongwith state of the art machinery for quality
production. With expected EPS of over Rs 9 for FY17, as compared to Rs 4.25 for
FY16, the stock is available at PE of just 7.5 FY17 (Industry PE above 20).
As
per the projection by Union Power Ministry, by the year 2020, every home in the
country will be electrified. The Union Budget 2016-2017, have given prominence
to Agriculture and Rural sector, apart from infrastructural development. All
these factors will boost the demand for Electrical equipment for Industry and
domestic consumption in the vast rural sector which in turn will result in huge
demand for winding wires.
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