Electrosteel Castings Ltd, India's largest manufacturer of ductile iron pipes, has a current market price of Rs 20.90 and a market capitalization of Rs 788.87 crore. The company reported a standalone sales of Rs 597.44 crore and a net profit of Rs 15.76 crore for the quarter ended December 2014, with a recommendation to buy/hold. The global forgings industry shows potential growth, with domestic demand for ductile iron pipes increasing due to infrastructure projects.

2. Current price BSE 20.90
Sector Casting and Forging
No of shares 343.82 Million
52 week high 36.90
52 week low 14.52
BSE Sensex 28503.30
Nifty 8647.75
Average Volume BSE 82570
Average Volume NSE 303910
BSE Code 5000128
NSE Symbol ELECTCAST
Recommendation
– BUY/HOLD
Date – 13/03/2015
Electrosteel Castings Ltd.

3. Company Overview
Electrosteel Castings Ltd is largest manufacturer of ductile iron (DI) spun pipes in India. The company is a
water infrastructure company providing techno-economic solutions for water supply and sewerage systems.
They are engaged in the business of manufacturing Ductile Iron Pipes and Fittings and Cast Iron Pipes. They
also undertake turnkey solutions for water transportation and sewerage management, which include
manufacturing DI Pipes, supplying and laying various types of pipes, operating the system and transferring to
the owners. The company is headquartered at Kolkata and having their manufacturing facilities at Elavur in
Tamilnadu, Khardah and Haldia in West Bengal. Electrosteel Castings Ltd was incorporated in the year 1955.
To meet the ever growing demand of its quality products and with Electrosteel acquired 46% stake in Lanco
Industries Limited in March 2002, which is involved in manufacturing of DI Pipes, Pig Iron, Cement and
Castings.
With respect to strengthening India's own infrastructure, Electrosteel ventured into the Steel Manufacturing
industry through its promoted Company Electrosteel Steels Limited. An Integrated Steel Plant has been set up
which is capable of producing 2.5 Million metric tonnes of Hot Metal, which is further processed into Pig Iron,
Billets, TMT Bars, Wire Rods and Ductile Iron Pipes.
Presently, over 60% of its products are exported around the world and Electrosteel has its subsidiaries in
eleven countries.
The current market capitalisation stands at Rs 788.87 crore. The company has reported a standalone sales of
Rs 597.44 crore and a Net Profit of Rs 15.76 crore for the quarter ended Dec 2014.

4. Category No. of Shares Percentage
Promoters 189,224,372 53.01
General Public 75,319,327 21.10
Foreign - OCB 27,480,414 7.70
Financial Institutions 25,695,542 7.20
Other Companies 24,137,278 6.76
Foreign Institutions 7,425,814 2.08
NBFC and Mutual Funds 3,000,200 0.84
Foreign - NRI 2,294,332 0.64
Others 273,043 0.08
Market Cap (Rs Cr) – 788.87
Company P/E – 8.16
Industry P/E – 27.16
Book Value (Rs) – 61.71%
Dividend (%) – 65%
EPS (TTM) – 2.72
Dividend Yield (%) – 2.94%
Face Value (Rs) - 1
Share Holding Pattern Financial Overview

5. Industry Overview
The global forgings industry is expected to grow at a CAGR of 9.42% over 2012-2016. One of the key factors
of growth in this sector is the increasing demand from the automotive industry and international forgings being
outsourced from Asia and Africa.
The industry has grown by 32.1% in dealer's market worldwide and 40.2% in value during2013, ensuring the
profitability of the industry, globally. The deal value, which the forging industry achieved in 2012 was 203%
higher than 2009, thereby widening the market. Asia dominated production in the realm of forging steel
manufacture. In the overall business, there was a decline in the US and the European markets (Source:
Global forging industry outlook, 2012-2016).
India's forgings industry currently operates at 60-70% of its operational efficiency. New technology and mass
production could mean more efficiency and lower cost. As the demand for high quality heavy forged
components rises in India, major industry players look for joint ventures and partnerships for capacity
expansion and technology up-gradation. This creates opportunities for global players to establish or increase
their presence in India.
The automobile industry in India has flourished at a healthy rate of 20% yoy from FY2006 to 2012, but has
reported a slowdown with the current growth rate sliding under 8%.Over-dependence on the automobile sector
could increase the risk for this industry. The12th Plan promises high growth for industry segments like power
generation, petrochemicals and the ship building industries. This, in turn, is expected to generate a demand
for heavy forged components. Based on this growth, demand for Indian forged components is predicted to rise
up to4.9 million tons by 2015-16. To meet this demand forging companies have already started expanding
their capacities through joint ventures. Inclusion of non-auto components in their product portfolio will help
them capitalize on the growing demand in the non-auto forging segment

6. Dividend and Bonus History

7. Index and Company Price Movement Comparison

8. Balance Sheet
Mar '14 Mar '13 Mar '12 Mar '11 Mar '10
Sources Of Funds
Total Share Capital 34.38 32.68 32.68 32.68 32.68
Equity Share Capital 34.38 32.68 32.68 32.68 32.68
Reserves 2,412.86 2,321.77 1,670.35 1,652.15 1,551.10
Networth 2,447.24 2,354.45 1,703.03 1,684.83 1,583.78
Secured Loans 2,167.69 1,875.09 1,284.84 1,240.57 1,129.74
Unsecured Loans 34.29 187.81 247.44 231.06 112.19
Total Debt 2,201.98 2,062.90 1,532.28 1,471.63 1,241.93
Total Liabilities 4,649.22 4,417.35 3,235.31 3,156.46 2,825.71
Application Of Funds
Gross Block 1,641.16 1,583.97 987.40 914.36 842.01
Less: Accum. Depreciation 546.53 489.47 431.92 376.31 317.38
Net Block 1,094.63 1,094.50 555.48 538.05 524.63
Capital Work in Progress 1,210.82 986.09 655.81 447.18 390.96
Investments 1,099.96 1,142.60 1,118.72 1,399.88 1,023.96
Inventories 556.80 451.74 552.94 519.80 356.73
Sundry Debtors 616.86 656.61 619.20 488.63 374.11
Cash and Bank Balance 228.84 320.44 156.47 15.04 10.36
Total Current Assets 1,402.50 1,428.79 1,328.61 1,023.47 741.20
Loans and Advances 600.09 333.98 412.72 209.29 239.42
Fixed Deposits 0.00 0.00 0.00 174.70 270.56
Total CA, Loans & Advances 2,002.59 1,762.77 1,741.33 1,407.46 1,251.18
Current Liabilities 687.44 490.70 711.88 504.35 248.35
Provisions 71.33 77.92 124.17 131.74 116.68
Total CL & Provisions 758.77 568.62 836.05 636.09 365.03
Net Current Assets 1,243.82 1,194.15 905.28 771.37 886.15
Total Assets 4,649.23 4,417.34 3,235.29 3,156.48 2,825.70
Contingent Liabilities 750.01 1,757.05 2,187.50 272.74 225.79
Book Value (Rs) 71.18 72.06 52.12 51.56 48.47

9. Profit and Loss Account
Mar '14 Mar '13 Mar '12 Mar '11 Mar '10
Income
Sales Turnover 2,186.88 1,934.55 1,916.66 1,783.90 1,496.51
Excise Duty 0.00 0.00 0.00 41.68 38.43
Net Sales 2,186.88 1,934.55 1,916.66 1,742.22 1,458.08
Other Income 19.70 95.05 70.77 54.81 62.02
Stock Adjustments 29.64 -9.15 4.69 20.23 22.86
Total Income 2,236.22 2,020.45 1,992.12 1,817.26 1,542.96
Expenditure
Raw Materials 1,260.07 1,141.05 1,168.14 998.65 746.33
Power & Fuel Cost 158.15 148.46 142.12 126.41 105.16
Employee Cost 148.76 137.49 123.09 122.87 106.08
Other Manufacturing Expenses 0.00 0.00 0.00 17.65 21.89
Selling and Admin Expenses 0.00 0.00 0.00 162.42 132.49
Miscellaneous Expenses 344.48 308.14 381.28 45.29 54.84
Total Expenses 1,911.46 1,735.14 1,814.63 1,473.29 1,166.79
Operating Profit 305.06 190.26 106.72 289.16 314.15
PBDIT 324.76 285.31 177.49 343.97 376.17
Interest 135.82 111.24 100.65 78.60 46.40
PBDT 188.94 174.07 76.84 265.37 329.77
Depreciation 52.97 53.09 54.26 54.41 52.30
Profit Before Tax 135.97 120.98 22.58 210.96 277.47
Extra-ordinary items 0.00 0.00 0.00 3.92 28.41
PBT (Post Extra-ord Items) 135.97 120.98 22.58 214.88 305.88
Tax 35.41 23.75 -19.80 60.25 101.63
Reported Net Profit 100.56 97.23 42.38 154.64 206.29
Total Value Addition 651.40 594.09 646.48 474.64 420.46
Equity Dividend 22.35 16.34 16.34 40.84 40.84
Corporate Dividend Tax 3.80 2.78 2.65 6.63 6.78
Per share data (annualised)
Shares in issue (lakhs) 3,438.17 3,267.53 3,267.53 3,267.53 3,267.53
Earning Per Share (Rs) 2.92 2.98 1.30 4.73 6.31
Equity Dividend (%) 65.00 50.00 50.00 125.00 125.00

10. PBIT – 11.42 v/s 6.75
RoCE – 5.84 v/s 5.25
RoE – 4.10 v/s 5.29
Net Profit Margin – 4.55 v/s 4.79
Return on net worth – 4.10 v/s 4.12
D/E Ratio – 0.90 v/s 0.88
Interest Cover – 2.00 v/s 2.09
Current Ratio – 0.95 v/s 0.84
Reserves – 2412.89 cr v/s 2321.77 cr
PAT – 100.56 cr v/s 97.23 cr
Total assets – 4649.23 cr v/s 4417.34 cr
Net sales – 2186.88 cr v/s 1934.55 cr
Book Value – 77.18 v/s 72.06
Important Ratios(YoY)
Days BSE NSE
30 18.27 18.09
50 18.17 18.08
150 21.44 21.48
200 24.15 24.17
Simple Moving Average

11. Symbol Value Action
RSI(14) 55.983 Buy
STOCH(9,6) 39.429 Sell
STOCHRSI(14) 100.000 Overbought
MACD(12,26) -1.280 Sell
ADX(14) 26.920 Buy
Williams %R -20.482 Buy
CCI(14) 268.9266 Overbought
ATR(14) 2.1643
Less
Volatility
Highs/Lows(14) 2.2393 Buy
Ultimate Oscillator 46.352 Sell
ROC 3.828 Buy
Bull/Bear Power(13) 6.5480 Buy
Technical Indicators

12. Investment Rationalize
Company was able to sustain its revenue growth even in the adverse market situations.
Reserves of the company stands at Rs.2447 Crores, which help the company in order internally finance its
financial requirements.
The domestic demand of Ductile Iron pipes fittings and Cast Iron pipes are supposed to increase mainly due
to major irrigation and water supply projects by the government.
Usage of cost effective manufacturing technology will add to the cost advantage of the company.
Entry into South American and African markets as well as improving economic situation in European market
will add to the companies revenue.
Advantage of first entry into market ie, Electrosteel Castings Ltd. is the first manufacturer of Ductile iron
pipes in India.
Current market price of the stock is well below the book value of Rs.61. Which means the stock is available
in discounted prices.
Growth forecast of the casting and forging industry and significant under performance of the company in the
current market rally will add to the growth prospects of the company.
Company is currently operates in very low capacity when it is compared with actual operational capacity, so
increase in market demand will help the company to operate in optimum limits which in turn add on to sales.