During the quarter, the company's net profit stood at a record Rs. 103.29 million as against Rs. 55.67 million over the corresponding quarter of last year, registered a growth of 85.54%. Maintain buy.

1. CMP 458.10
Target Price 513.00
ISIN: INE528K01011
JULY 15th
2014
GALLANTT ISPAT LIMITED
Result Update (PARENT BASIS): Q1 FY15
BUYBUYBUYBUY
Index Details
Stock Data
Sector Iron & steel
BSE Code 533265
Face Value 10.00
52wk. High / Low (Rs.) 481.40/61.20
Volume (2wk. Avg. Q) 28000
Market Cap (Rs. in mn.) 13407.21
Annual Estimated Results (A*: Actual / E*: Estimated)
YEARS FY14A FY15E FY16E
Net Sales 4738.15 5401.49 5941.64
EBITDA 498.20 637.38 695.17
Net Profit 149.80 274.29 303.22
EPS 5.12 9.37 10.36
P/E 89.50 48.88 44.22
Shareholding Pattern (%)
1 Year Comparative Graph
GALLANTT ISPAT LTD BSE SENSEX
SYNOPSIS
Gallantt Ispat Ltd. manufactures superior quality
Sponge Iron, Mild steel billets, Re-Rolled products
(TMT bars), wheat products.
The company’s net profit stood at a record Rs.
103.29 million as against Rs. 55.67 million over
the corresponding quarter of last year, registered
a growth of 85.54%.
The company’s revenue registered a 6.62%
increase and stood at a record Rs. 1213.87 million
from Rs. 1138.50 million over the corresponding
quarter last year.
EBIDT is increased by 15.68% to Rs. 175.17
million from Rs. 151.43 million in corresponding
period of previous year.
EPS stood at Rs. 3.53 as against Rs. 1.90 over the
corresponding quarter last year.
Revenues of Agro and steel rose by 7% and 6%
respectively over the same quarter previous year.
PAT shown an increase of Rs. 149.80 million in
FY14 as compared to Rs. 117.28 million in FY13,
grew by 28%.
Net Sales and PAT of the company are expected to
grow at a CAGR of 13% and 37% over 2013 to
2016E respectively.
PEER GROUPS CMP MARKET CAP EPS P/E (X) P/BV(X) DIVIDEND
Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%)
Gallantt Ispat Ltd 458.10 13407.21 5.12 89.50 6.49 5.00
Prakash Industries Ltd 99.90 13415.20 12.88 7.74 0.59 10.00
Jai Corp Ltd 105.35 18728.30 4.38 23.96 0.87 50.00
Jindal Steel & Power Ltd 283.85 259736.10 14.12 20.11 1.90 150.00

2. QUARTERLY HIGHLIGHTS (PARENT BASIS)
Results updates- Q1 FY15,
Gallantt Ispat Limited engages in the production and
sale of iron, steel, and wheat products in India and
internationally, reported its financial results for the
quarter ended 30th Jun, 2014.
The company’s net profit jumps to Rs. 103.29 million against Rs. 55.67 million in the corresponding quarter
ending of previous year, an increase of 85.54%. Revenue for the quarter rose by 6.62% to Rs. 1213.87 million
from Rs. 1138.50 million, when compared with the prior year period. Reported earnings per share of the
company stood at Rs. 3.53 a share during the quarter as against Rs. 1.90 over previous year period. Profit before
interest, depreciation and tax is Rs. 175.17 millions as against Rs. 151.43 millions in the corresponding period of
the previous year.
Break up of Expenditure
Break up of Expenditure
Rs. In Millions
Q1 FY15 Q1 FY14
Cost of Material Consumed 938.87 1013.56
Employees Benefit
Expenses
12.59 6.30
Depreciation &
Amortization Expenses
42.47 42.19
Other Expenses 96.51 66.19
Months Jun-14 Jun-13 % Change
Net Sales 1213.87 1138.50 6.62%
PAT 103.29 55.67 85.54%
EPS 3.53 1.90 85.54%
EBITDA 175.17 151.43 15.68%

3. Segment Revenue
COMPANY PROFILE
Gallantt Ispat Limited was incorporated in 2005. It produces and sells iron, steel, and wheat products in India
and internationally. The company operates in three segments: Steel, Agro, and Power. It offers sponge iron, mild
steel billets, and re-rolled products, such as TMT bars and structurals, as well as wheat flour products.
The company is committed to produce the best quality steel is well reflected in the fact that it has attained
certifications from various recognized organizations such as Bureau of Indian Standard (ISI), ISO 9001-2000, and
H & K (Germany) to name a few. The company is currently catering to various reputed clients such as Adani,
Reliance and TATA.
GIL have set up an integrated steel plant and modern roller flour mill at Sector- 23, GIDA, Sahjanwa, Gorakhpur-
Uttar Pradesh, to manufacture Sponge Iron, Mild steel billets, Re-Rolled products (TMT bars), flour. Considering
the power requirements of the existing manufacturing facilities and is also setting up a captive power plant of 18
MW to meet its requirement of power.
The in house consumption of entire Sponge Iron to manufacture billets which is further rolled into TMT bars
along with installation of captive power plant to utilize the waste heat would improve the profitability of the
project thereby making it economically more viable.
Products
• Sponge Iron
• M.S. Billets
• Rolling Mill
• Wheat Products

4. FINANCIAL HIGHLIGHT (PARENT BASIS) (A*- Actual, E* -Estimations & Rs. In Millions)
Balance Sheet as at March31, 2013 -2016E
FY13A FY14A FY15E FY16E
SOURCES OF FUNDS
Shareholder's Funds
Share Capital 267.67 292.67 292.67 292.67
Reserves and Surplus 1641.59 1774.15 2048.44 2351.66
1. Sub Total - Net worth 1909.26 2066.82 2341.11 2644.33
Non Current Liabilities
Long term borrowings 530.95 212.40 163.55 142.29
Deferred Tax Liabilities 169.82 191.90 209.17 221.72
Other Long Term Liabilities 391.55 548.34 625.11 681.37
2. Sub Total - Non Current Liabilities 1092.32 952.64 997.83 1045.38
Current Liabilities
Short Term Borrowings 878.12 995.79 1055.54 1087.20
Trade Payables 25.58 16.90 17.40 18.97
Other Current Liabilities 507.31 602.33 656.54 689.37
Short Term Provisions 17.01 23.03 25.56 27.86
3. Sub Total - Current Liabilities 1428.02 1638.05 1755.04 1823.40
Total Liabilities (1+2+3) 4429.60 4657.51 5093.98 5513.11
APPLICATION OF FUNDS
Non-Current Assets
a) Fixed Assets 2734.38 2581.81 2710.90 2805.78
b) Non-current investments 5.15 5.15 5.67 6.23
c) Long Term loans and advances 2.41 0.18 0.23 0.28
1. Sub Total - Non Current Assets 2741.94 2587.14 2716.80 2812.29
Current Assets
Inventories 362.38 395.87 423.58 444.76
Trade receivables 383.69 347.50 337.07 350.56
Cash and Bank Balances 25.34 56.97 70.64 81.24
Short-terms loans & advances 910.92 1267.49 1543.09 1820.85
Other current assets 5.33 2.54 2.79 3.41
2. Sub Total - Current Assets 1687.66 2070.37 2377.18 2700.81
Total Assets (1+2) 4429.60 4657.51 5093.98 5513.11

5. Annual Profit & Loss Statement for the period of 2013 to 2016E
Value(Rs.in.mn) FY13A FY14A FY15E FY16E
Description 12m 12m 12m 12m
Net Sales 4110.92 4738.15 5401.49 5941.64
Other Income 225.00 0.00 0.00 0.00
Total Income 4335.92 4738.15 5401.49 5941.64
Expenditure -3803.42 -4239.95 -4764.12 -5246.47
Operating Profit 532.50 498.20 637.38 695.17
Interest -209.40 -154.12 -149.50 -156.97
Gross profit 323.10 344.08 487.88 538.20
Depreciation -166.44 -169.41 -176.19 -181.47
Exceptional Items -5.13 -2.78 0.00 0.00
Profit Before Tax 151.53 171.89 311.69 356.73
Tax -34.25 -22.09 -37.40 -53.51
Net Profit 117.28 149.80 274.29 303.22
Equity capital 267.67 292.67 292.67 292.67
Reserves 1643.04 1774.15 2048.44 2351.66
Face value 10.00 10.00 10.00 10.00
EPS 4.38 5.12 9.37 10.36
Quarterly Profit & Loss Statement for the period of 31st Dec, 2013 to 30th Sep, 2014E
Value(Rs.in.mn) 31-Dec-13 31-Mar-14 30-Jun-14 30-Sep-14E
Description 3m 3m 3m 3m
Net sales 1175.58 1255.76 1213.87 1274.56
Other income 0.00 0.00 0.00 0.00
Total Income 1175.58 1255.76 1213.87 1274.56
Expenditure -1065.43 -1155.22 -1038.70 -1134.36
Operating profit 110.15 100.54 175.17 140.20
Interest -35.06 -47.12 -25.64 -24.61
Gross profit 75.09 53.42 149.53 115.59
Depreciation -43.02 -41.76 -42.47 -42.89
Exceptional Items 0.00 -2.78 0.00 0.00
Profit Before Tax 32.07 8.88 107.06 72.69
Tax -6.72 12.08 -3.77 -13.08
Net Profit 25.35 20.96 103.29 59.61
Equity capital 292.67 292.67 292.67 292.67
Face value 10.00 10.00 10.00 10.00
EPS 0.87 0.72 3.53 2.04

6. Ratio Analysis
Particulars FY13A FY14A FY15E FY16E
EPS (Rs.) 4.38 5.12 9.37 10.36
EBITDA Margin (%) 12.95 10.51 11.80 11.70
PBT Margin (%) 3.69 3.63 5.77 6.00
PAT Margin (%) 2.85 3.16 5.08 5.10
P/E Ratio (x) 104.55 89.50 48.88 44.22
ROE (%) 6.14 7.25 11.72 11.47
ROCE (%) 21.05 20.38 22.85 22.63
Debt Equity Ratio 0.74 0.58 0.52 0.46
EV/EBITDA (x) 3.15 3.07 2.69 2.45
Book Value (Rs.) 71.38 70.62 79.99 90.35
P/BV 6.42 6.49 5.73 5.07
Charts

7. OUTLOOK AND CONCLUSION
At the current market price of Rs. 458.10, the stock P/E ratio is at 48.88 x FY15E and 44.22 x FY16E
respectively.
Earning per share (EPS) of the company for the earnings for FY15E and FY16E is seen at Rs. 9.37 and Rs.
10.36 respectively.
Net Sales and PAT of the company are expected to grow at a CAGR of 13% and 37% over 2013 to 2016E
respectively.
On the basis of EV/EBITDA, the stock trades at 2.69 x for FY15E and 2.45 x for FY16E.
Price to Book Value of the stock is expected to be at 5.73 x and 5.07 x respectively for FY15E and FY16E.
We expect that the company surplus scenario is likely to continue for the next three years, will keep its
growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of
Rs. 513.00 for Medium to Long term investment.

8. INDUSTRY OVERVIEW
Introduction
India has become the second best in terms of growth amongst the top ten steel producing countries in the world
and a net exporter of steel during 2013–14. Steel production in India recorded a growth rate of 4.8 per cent in
February 2014 over February 2013. The cumulative growth during April–February, 2013–14 stood at 4.2 per
cent over the corresponding period of the previous year.
Steel contributes to nearly two per cent of the gross domestic product (GDP) and employs over 500,000 people.
The total market value of the Indian steel sector stood at US$ 57.8 billion in 2011 and is expected to touch US$
95.3 billion by 2016. The infrastructure sector is India’s largest steel consumer, thereby attracting investments
from several global players. Owing to this connection with core infrastructure segments of the economy, the steel
industry is of high priority right now. Also, steel demand is derived from other sectors like automobiles,
consumer durables and infrastructure; therefore, its fortune is dependent on the growth of these user industries.
The liberalisation of the industrial policy and other government initiatives has given a definite impetus for entry,
participation and growth of the private sector in the steel industry. Allowing foreign direct investment (FDI) has
been a positive step since India is heavily dependent on foreign technologies. These foreign technologies
generally add life to the plant and production units, which ultimately lead to the country’s economic growth.
Market Size
India’s real consumption of total finished steel grew by 0.6 per cent year-on-year in April–March 2013-14 to
73.93 million tonnes (MT). Construction sector accounts for around 60 per cent of the country's total steel
demand while the automobile industry consumes 15 per cent.
India became net steel exporter in 2013–14 and is likely to maintain the momentum in 2014-15 as producers are
looking to dock more overseas shipment to tide over subdued domestic consumption. Total steel exports by
India during 2013–14 stood at 5.59 MT, as against imports of 5.44 MT. During the period, Steel Authority of India
(SAIL) clocked a 30 per cent growth in exports and aims to more than double the shipments to 1 MT in 2014–15.
Rashtriya Ispat Nigam Ltd (RINL), which exported 1 lakh tonne steel last fiscal, aims to treble that in the current
fiscal.
Iron ore export from India has showed a 253 per cent increase during the period October–December 2013, at
3.75 MT as against 1.06 MT in the corresponding period of the previous year, on the back of the opening of new
mines in Chhattisgarh, Madhya Pradesh and Rajasthan, as per the Federation of Indian Mineral Industries (FIMI).

9. Investments
India needs investment of US$ 210 billion over the next decade to achieve the steel production capacity of 300
million tonnes per annum (MTPA) by 2025 from the current 90 MT. Some of the major investments in the sector
are as follows:
• India's third-largest steel maker, JSW Steel, plans to purchase Welspun Maxsteel for about Rs 1,000 crore
(US$ 165.32 million). The acquisition will help JSW secure continuous supply of cheaper raw material as
it plans to expand its capacity at Dolvi, Maharashtra, to 5 MT to supply in the western and northern
markets.
• Prize Petroleum, a wholly-owned subsidiary of Hindustan Petroleum Corporation Ltd (HPCL), has
acquired stakes in two Australian hydrocarbon fields for A$ 85 million (US$ 79.27 million). The company
has entered into an agreement with Sydney-based AWE Ltd to acquire 11.25 per cent stake in T/L1 area
and 9.75 per cent interest in T/18P area.
• McNally Bharat Engineering Co Ltd has entered Russia for the first time through a subsidiary, MBE Coal &
Minerals Technologies GMBH. It received an order worth €5.95 million (US$ 8.21 million) from
Eurochem Group of Russia for an iron ore mining project.
• Canada has invited Coal India Ltd (CIL) to explore mining opportunities in British Columbia, Canada. Mr.
Stewart Beck, Canadian High Commissioner met with Mr. N Kumar, Director (Technical) of Coal India Ltd,
to seek investments for coal assets in the Canadian province. CIL currently holds interests in two assets in
Mozambique acquired through a concession agreement between the African and Indian governments.
Government Initiatives
The Government of India has allowed 100 per cent FDI through the automatic route in the Indian steel sector. It
has significantly reduced the duty payable on finished steel products and has streamlined the associated
approval process.
The government is taking steps to increase industrial activity in Uttar Pradesh (UP). Addressing a Conference on
‘Demand for Steel in India: The End User Perspective, in order to increase supply of steel to rural consumers,
companies like SAIL and RINL have set up 521 and more than 100 rural dealers respectively in remote parts of
UP.
In order to provide thrust on research and development (R&D), the Ministry of Steel is encouraging R&D
activities both in public and private steel sectors, by providing financial assistance from Steel Development Fund
(SDF) and Plan Scheme of the Central Government. Under the SDF scheme, 82 R&D projects have been approved
with total project cost of Rs 677 crore (US$ 111.92 million) wherein SDF assistance is Rs 370 crore (US$ 61.17
million). Under the Plan Scheme, eight projects were approved with a total cost of Rs 123.27 crore (US$ 20.38
million) wherein Government assistance is Rs 87.28 crore (US$ 14.43 million).

10. To encourage beneficiation and pelletisation of iron ore fines in the country, basic customs duty on the plants
and equipment required for initial setting up or substantial expansion of iron ore pellets plants and iron ore
beneficiation plants has been reduced from 7.5 per cent to 2.5 per cent. Import of critical raw materials for steel
industry, such as coking coal, non-coking coal and scrap are subject to zero or very low levels of custom duty.
Road Ahead
The future of the Indian steel industry is bright. The government plans to increase infrastructure spending from
the current 5 per cent GDP to 10 per cent by 2017, and the country is committed to investing US$ 1 trillion in
infrastructure during the 12th Five-Year plan. “Taking 15 per cent as steel component in the total investment,
then it can generate additional demand worth US$ 75 billion of steel in the next few years or US$ 15 billion worth
of additional demand a year or in terms of quantity, an additional demand of 18.75 MT per annum.
With urban population increasing globally, there is a greater need for steel to build public-transport
infrastructure. Emerging economies will also continue to be a major driver of demand as these necessitate a huge
amount of steel for urbanisation and industrialisation. The sector is expected to see an investment to the tune of
about Rs 2 trillion (US$ 33.06 billion) in the coming years.
Disclaimer:
This document prepared by our research analysts does not constitute an offer or solicitation for the purchase or sale
of any financial instrument or as an official confirmation of any transaction. The information contained herein is
from publicly available data or other sources believed to be reliable but do not represent that it is accurate or
complete and it should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of it’s affiliates shall
not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the
information contained in this report. This document is provide for assistance only and is not intended to be and must
not alone be taken as the basis for an investment decision.

11. Firstcall India Equity Research: Email – info@firstcallindia.com
C.V.S.L.Kameswari Pharma
U. Janaki Rao Capital Goods
B. Anil Kumar Auto, IT & FMCG
M. Vinayak Rao Diversified
C. Bhagya Lakshmi Diversified
B. Vasanthi Diversified
Firstcall India also provides
Firstcall India Equity Advisors Pvt.Ltd focuses on, IPO’s, QIP’s, F.P.O’s,Takeover
Offers, Offer for Sale and Buy Back Offerings.
Corporate Finance Offerings include Foreign Currency Loan Syndications,
Placement of Equity / Debt with multilateral organizations, Short Term Funds
Management Debt & Equity, Working Capital Limits, Equity & Debt
Syndications and Structured Deals.
Corporate Advisory Offerings include Mergers & Acquisitions (domestic and
cross-border), divestitures, spin-offs, valuation of business, corporate
restructuring-Capital and Debt, Turnkey Corporate Revival – Planning &
Execution, Project Financing, Venture capital, Private Equity and Financial
Joint Ventures
Firstcall India also provides Financial Advisory services with respect to raising
of capital through FCCBs, GDRs, ADRs and listing of the same on International
Stock Exchanges namely AIMs, Luxembourg, Singapore Stock Exchanges and
other international stock exchanges.
For Further Details Contact:
3rd Floor,Sankalp,The Bureau,Dr.R.C.Marg,Chembur,Mumbai 400 071
Tel. : 022-2527 2510/2527 6077/25276089 Telefax : 022-25276089
E-mail: info@firstcallindiaequity.com
www.firstcallindiaequity.com