Rajratan Global Wire Ltd reported financial results for the quarter ending March 31, 2015. Net profit increased 62.31% to Rs. 24.46 million compared to the same quarter last year. Revenue rose 3.56% to Rs. 624.64 million. Earnings per share was Rs. 5.62, up from Rs. 3.46 last year. The company expects sales and profits to grow annually by 8% and 3% from 2014-2017. The document provides an analysis of the company's quarterly performance, financial estimates, industry overview and a recommendation to buy the stock.

1. CMP 83.15
Target Price 93.00
ISIN: INE451D01011
JULY 11th
, 2015
RAJRATAN GLOBAL WIRE LTD
Result Update (PARENT BASIS): Q4 FY15
BUY
Index Details
Stock Data
Sector Iron & Steel Products
BSE Code 517522
Face Value 10.00
52wk. High / Low (Rs.) 118.80/67.00
Volume (2wk. Avg.) 562
Market Cap (Rs. in mn.) 361.87
Annual Estimated Results (A*: Actual / E*: Estimated)
YEARS FY15A FY16E FY17E
Net Sales 2390.11 2509.62 2700.35
EBITDA 216.77 222.60 236.85
Net Profit 63.81 70.10 76.71
EPS 14.66 16.11 17.63
P/E 5.67 5.16 4.72
Shareholding Pattern (%)
1 Year Comparative Graph
RAJRATAN GLOBAL WIRE LTD S&P BSE SENSEX
SYNOPSIS
Rajratan Global Wire Ltd is one of the leading
manufacturers of High Carbon Steel Wire in India –
specializing in Automotive Tyre Bead Wire, high
quality Spring & Rope Wires are other speciality
products.
In Q4 FY15, Net profit jumps to Rs. 24.46 million an
increase of 62.31% from Rs. 15.07 million in the
corresponding quarter of previous year.
The company’s net sales registered 3.56% increase
and stood at Rs. 624.64 million against Rs. 603.18
million over the previous year period.
Operating profit is Rs. 62.63 million as against Rs.
54.56 million in the corresponding period of the
previous year, grew by 14.79%.
Reported earnings per share of the company stood at
Rs. 5.62 in Q4 FY15 as against Rs. 3.46 in Q4 FY14.
During the quarter, Profit before tax stood at Rs.
38.56 million as against Rs. 22.97 million over the
corresponding quarter of previous year, an increase
of 67.87%.
Other income during the quarter stood at Rs. 2.39
million as compared to Rs. 1.01 million in Q4 FY14.
The company has recommended a Dividend @ 10%
of Rs. 1.00 per share on face value of Rs. 10.00/- each
for the Financial Year 2014-15.
Net Sales and PAT of the company are expected to
grow at a CAGR of 8% and 3% over 2014 to 2017E
respectively.
PEER GROUPS CMP MARKET CAP EPS P/E (X) P/BV(X) DIVIDEND
Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%)
Rajratan Global Wire Ltd 83.15 361.87 14.66 5.67 0.44 10.00
Good Luck Steel Tube Ltd 90.60 1993.80 13.28 6.82 1.15 75.00
Suraj Ltd 53.65 1033.50 3.58 14.99 1.16 15.00
APL Apollo Tubes Ltd 379.20 8887.9 13.42 28.26 2.49 60.00

2. QUARTERLY HIGHLIGHTS (PARENT BASIS)
Results Updates- Q4 FY15
Rajratan Global Wire Limited (RGWL) incorporated in
1988 is one of the leading manufacturers of High Carbon
Steel Wire in India – specializing in Automotive Tyre Bead
Wire, high quality Spring & Rope Wires are other
speciality products has reported its financial results for
the quarter ended 31st March, 2015.
The company’s net profit jumps to Rs. 24.46 million in 4th Quarter of financial year 2015 from Rs. 15.07 million in
the corresponding quarter ending of previous year, an increase of 62.31% y-o-y. Revenue for the quarter rose by
3.56% to Rs. 624.64 million from Rs. 603.18 million, when compared with the prior year period. Reported
earnings per share of the company stood at Rs. 5.62 a share during the quarter as against Rs. 3.46 over previous
year period. Profit before interest, depreciation and tax is Rs. 62.63 million as against Rs. 54.56 million in the
corresponding period of the previous year.
Break up of Expenditure
Months Mar-15 Mar-14 % Change
Net Sales 624.64 603.18 3.56
PAT 24.46 15.07 62.31
EPS 5.62 3.46 62.31
EBITDA 62.63 54.56 14.79
Break up of Expenditure
(Rs in millions)
Q4 FY15 Q4 FY14 Chng %
Material and related cost 292.45 309.34 -5%
Purchase of Stock in Trade 144.47 125.42 15%
Employee Benefit
Expenses
22.86 25.63 -11%
Dep & Amortization Exp 0.21 10.22 -98%
Other Expenses 94.74 96 -1%

3. COMPANY PROFILE
Rajratan Global Wire Limited (RGWL) incorporated in 1988 is one of the leading manufacturers of High Carbon
Steel Wire in India – specializing in Automotive Tyre Bead Wire, high quality Spring & Rope Wires are other
speciality products of the company.
In addition, the company provides prestressed concrete wires and strands used in the construction of bridges,
silos, buildings, dams, atomic reactor vessels, stadia, airport hangars, and runways, as well as in the manufacture
of mass produced components, including railway sleepers, water pipes, electricity poles, beams, hollow and solid
slabs, etc.
RGWL has most modern factory at Pithampur, which is 25 Km from Indore, a prominent industrial city in Central
India. The quest for quality, excellence and progress driven by the total dedication of a competent and
professional team is the hallmark of RGWL. With its “state of art” plant RGWL is equipped to produce high value
steel wires with precise product characteristics.
In a short span of time RGWL has achieved leadership position in Tyre Bead Wire business in India having a
global scale of operation & to take the tradition of quality & excellence further, RGWL has formed a 100%
subsidiary company Rajratan Thai Wire Co. Ltd. (RTWL) and started an ultra modern facility to produce
Automotive Tyre Bead Wire in Thailand. This is a true step towards globalization efforts of RGWL.
RGWL is an ISO TS 16949 (2002) certified company for its entire range of automotive tyre bead wires.

4. FINANCIAL HIGHLIGHT (PARENT BASIS) (A*- Actual, E* -Estimations & Rs. In Millions)
Balance Sheet as at March 31, 2014 -2017E
FY-14A FY-15A FY-16E FY-17E
SOURCES OF FUNDS
Shareholder's Funds
Share Capital 43.52 43.52 43.52 43.52
Reserves and Surplus 725.48 775.08 823.13 867.58
1. Sub Total - Net worth 769.00 818.60 866.65 911.10
Non Current Liabilities
Long term Borrowings 47.34 175.98 242.85 310.85
Deferred Tax Liabilities 84.26 80.82 84.86 91.65
2. Sub Total - Non Current Liabilities 131.60 256.80 327.71 402.50
Current Liabilities
Short term Borrowings 443.06 432.72 454.36 472.53
Trade Payables 284.37 281.22 275.60 262.92
Other Current Liabilities 62.21 74.63 85.82 96.98
Short Term Provisions 13.86 8.77 7.45 6.56
3. Sub Total - Current Liabilities 803.49 797.34 823.23 838.99
Total Liabilities (1+2+3) 1704.09 1872.74 2017.60 2152.60
APPLICATION OF FUNDS
Non-Current Assets
Fixed Assets
Tangible assets 428.87 405.75 419.55 429.20
Capital Work in Progress 0.34 2.99 4.25 5.48
a) Sub Total - Fixed Assets 429.21 408.74 423.79 434.68
b) Non-current investments 341.56 389.26 432.08 475.29
c) Long Term loans and advances 32.00 111.78 142.29 159.36
1. Sub Total - Non Current Assets 802.77 909.78 998.16 1069.33
Current Assets
Inventories 148.53 204.94 237.73 262.69
Trade receivables 656.41 655.52 672.56 703.50
Cash and Bank Balances 9.57 53.85 75.93 93.03
Short-terms loans & advances 86.65 48.42 32.93 23.71
Other current assets 0.16 0.23 0.29 0.34
2. Sub Total - Current Assets 901.32 962.96 1019.44 1083.27
Total Assets (1+2) 1704.09 1872.74 2017.60 2152.60

5. Annual Profit & Loss Statement for the period of 2014 to 2017E
Value(Rs.in.mn) FY14A FY15A FY16E FY17E
Description 12m 12m 12m 12m
Net Sales 2320.57 2390.11 2509.62 2700.35
Other Income 10.63 9.87 9.28 10.02
Total Income 2331.20 2399.98 2518.89 2710.37
Expenditure -2100.04 -2183.21 -2296.30 -2473.52
Operating Profit 231.16 216.77 222.60 236.85
Interest -88.82 -90.64 -95.08 -98.88
Gross profit 142.34 126.13 127.51 137.96
Depreciation -38.56 -30.49 -24.27 -25.48
Profit Before Tax 103.78 95.64 103.24 112.48
Tax -31.40 -31.83 -33.14 -35.77
Net Profit 72.38 63.81 70.10 76.71
Equity capital 43.52 43.52 43.52 43.52
Reserves 725.48 775.08 823.13 867.58
Face value 10.00 10.00 10.00 10.00
EPS 16.63 14.66 16.11 17.63
Quarterly Profit & Loss Statement for the period of 30th Sept, 2014 to 30th June, 2015E
Value(Rs.in.mn) 30-Sep-14 31-Dec-14 31-Mar-15 30-Jun-15E
Description 3m 3m 3m 3m
Net sales 543.49 584.69 624.64 658.37
Other income 3.48 3.01 2.39 1.72
Total Income 546.97 587.70 627.03 660.09
Expenditure -497.83 -541.92 -564.40 -595.83
Operating profit 49.14 45.78 62.63 64.27
Interest -20.74 -25.37 -23.86 -22.57
Gross profit 28.40 20.41 38.77 41.69
Depreciation -10.13 -10.15 -0.21 -0.18
Profit Before Tax 18.27 10.26 38.56 41.51
Tax -6.03 -2.44 -14.10 -13.20
Net Profit 12.24 7.82 24.46 28.31
Equity capital 43.52 43.52 43.52 43.52
Face value 10.00 10.00 10.00 10.00
EPS 2.81 1.80 5.62 6.50

6. Ratio Analysis
Particulars FY14A FY15A FY16E FY17E
EPS (Rs.) 16.63 14.66 16.11 17.63
EBITDA Margin (%) 9.96% 9.07% 8.87% 8.77%
PBT Margin (%) 4.47% 4.00% 4.11% 4.17%
PAT Margin (%) 3.12% 2.67% 2.79% 2.84%
P/E Ratio (x) 5.00 5.67 5.16 4.72
ROE (%) 9.41% 7.80% 8.09% 8.42%
ROCE (%) 21.42% 17.32% 15.79% 15.48%
Debt Equity Ratio 0.64 0.74 0.80 0.86
EV/EBITDA (x) 3.65 4.23 4.42 4.44
Book Value (Rs.) 176.70 188.10 199.14 209.35
P/BV 0.47 0.44 0.42 0.40
Charts

7. OUTLOOK AND CONCLUSION
At the current market price of Rs. 83.15, the stock P/E ratio is at 5.16 x FY16E and 4.72 x FY17E
respectively.
Earnings per share (EPS) of the company for the earnings for FY15E and FY16E are seen at Rs. 16.11 and
Rs. 17.63 respectively.
Net Sales and PAT of the company are expected to grow at a CAGR of 8% and 3% over 2014 to 2017E
respectively.
On the basis of EV/EBITDA, the stock trades at 4.42 x for FY16E and 4.44 x for FY17E.
Price to Book Value of the stock is expected to be at 0.42 x and 0.40 x respectively for FY16E and FY17E.
We recommend ‘BUY’ in this particular scrip with a target price of Rs. 93.00 for Medium to Long term
investment.
INDUSTRY OVERVIEW
The Indian steel sector enjoys advantages of domestic availability of raw materials and cheap labour. Iron ore is
also available in abundant quantities. This provides major cost advantage to the domestic steel industry. The
steel industry reflects the overall economic growth of an economy in the long term as demand for steel is derived
from other sectors like automobiles, consumer durables and infrastructure.
While steel continues to have a stronghold in traditional sectors such as construction, housing and ground
transportation, special steels are increasingly being used in engineering industries such as power generation,
petrochemicals and fertilisers.
The Indian steel industry is very modern with state-of-the-art steel mills. It has always strived for continuous
modernisation and up-gradation of older plants and higher energy efficiency levels. These features of the
industry have made India the world's fourth largest producer of steel and the country is poised to move to
second position in steel production in the next 10 years.
Market Size
Steel production capacity of the country expanded from about 75 million tonnes per annum (MTPA) in 2009-10
to about 101.02 million tonnes (MT) in 2013-14, when output was 81.7 MT.
India produced 7.07 MT of steel in January 2015 reporting the fourth highest production level globally which was
1.7 per cent higher than the country's steel production in the same month last year.

8. The steel sector in India contributes nearly two per cent of the country’s gross domestic product (GDP) and
employs over 600,000 people. The per capita consumption of total finished steel in the country has risen from 51
Kg in 2009-10 to about 60 Kg in 2013-14.
Investments
Steel industry and its associated mining and metallurgy sectors have seen a number of major investments and
developments in the recent past.
According to the data released by Department of Industrial Policy and Promotion (DIPP), the Indian mining and
metallurgical industries attracted foreign direct investments (FDI) to the tune of US$ 1,669.49 million and US$
8,527.34 million, respectively, in the period April 2000–February 2015.
Some of the major investments in the Indian steel industry are as follows:
• JSW Steel has announced to add capacity to make its plant in Karnataka the largest at 20 MT by 2022.
• Tata Steel has planned to commission 3 MT of capacity in its Odisha plant and plans to add another 3 MT at
the plant in near future.
Government Initiatives
The Government of India is aiming to scale up steel production in the country to 300 MT by 2025 from 81 MT in
2013-14.
The Ministry of Steel has announced to invest in modernisation and expansion of steel plants of Steel Authority of
India Limited (SAIL) and Rashtriya Ispat Nigam Limited (RINL) in various states to enhance the crude steel
production capacity in the current phase from 12.84 MTPA to 21.4 MTPA and from 3 MTPA to 6.3 MTPA
respectively.
The Ministry of Steel is facilitating setting up of an industry driven Steel Research and Technology Mission of
India (SRTMI) in association with the public and private sector steel companies to spearhead research and
development activities in the iron and steel industry at an initial corpus of Rs 2000.00 mn (US$ 31.67 million).
Some of the other recent government initiatives in this sector are as follows:
• An Inter Ministerial Group (IMG) has been setup in the Ministry of Steel for effective coordination and
expediting implementation of various investment projects in the steel sector.
• A Project Monitoring Group (PMG) has been constituted under the Cabinet Secretariat to fast track various
clearances/resolution of issues delaying the investments in the sector.

9. • To increase domestic value addition and improve iron ore availability for domestic steel industry, duty on
export of iron ore has been increased to 30 per cent.
• Rates of custom duty on stainless steel flat products have been enhanced from 5 per cent to 7.5 per cent in
the Union Budget for 2014-15.
Road ahead
India is expected to become the world's second largest producer of crude steel in 2015-16, moving up from the
fourth position, as its capacity is projected to increase from 100 MT to about 112.5 MT in 2016. Also, India has
set an output target of 300 MT of steel by 2025.
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