Multiyear breakout- going steel strong !!

9 ส.ค.

RUDRA

Research Report: Rudra Global Infra Products Ltd.
1. Company Overview
Rudra Global Infra Products Ltd. (RGIPL) is a significant player in the Indian steel manufacturing sector, specifically focusing on TMT Bars production. Incorporated in Bhavnagar, Gujarat, RGIPL began as M.D. Inducto Cast Pvt. Ltd. in 2013, initially producing MS billets. By 2014, the company expanded into TMT Bars manufacturing, leveraging the rising demand for steel products in Gujarat. Rebranded in 2016, RGIPL has consistently grown, both in scale and scope, enhancing its capacity from 1.2 lakh tons to 2.4 lakh tons annually in its Steel Melting Shop (SMS) and Rolling Mill (RM) divisions.

Strategic Expansion:

Backward Integration: RGIPL has successfully implemented backward integration by using scrap from its ship recycling business to produce steel billets, minimizing environmental impact and reducing costs. This vertical integration provides RGIPL with a competitive edge, ensuring a steady supply of high-quality raw materials at lower costs.
Forward Integration: The company has also engaged in forward integration, expanding its product offerings and enhancing its market reach. The launch of the "Rudra TMX" brand in 2014 marked a significant milestone, positioning the company as a premium TMT Bars manufacturer.
Recent Developments:

RGIPL has diversified into aerospace and defense sectors through its subsidiary, Rudra Aerospace and Defence Pvt. Ltd., which focuses on precision and investment casting solutions.
The company has also been actively involved in sustainable practices, integrating renewable energy sources into its operations and adopting a circular economy model in its scrap processing activities.
2. Industry Outlook
Global and Indian Steel Industry:

The global steel industry is poised for moderate growth, driven by infrastructure development, urbanization, and government initiatives in emerging economies. According to the World Steel Association, the demand for steel is expected to grow steadily, with non-flat products like Bars & Rods, particularly in high demand.
India, being one of the largest steel producers globally, has seen significant growth in crude steel production, with an increase of 13.6% in 2023-24. The Indian government’s infrastructure projects, such as the National Infrastructure Pipeline (NIP) and PM Gati Shakti, are set to fuel the demand for steel products in the coming years.
Gujarat Steel Industry:

Gujarat, one of India’s most industrially developed states, contributes significantly to the country’s steel output. The state’s robust infrastructure, policy support, and strong industrial base make it a favorable location for steel manufacturing.
3. Technical Analysis
The monthly chart for Rudra Global Infra Products Ltd. (NSE: RUDRA) indicates a strong bullish breakout from a multi-year resistance level around ₹64.25, with the current price surging to ₹69.00. This breakout is accompanied by a substantial increase in trading volume, suggesting strong buying interest and potential for further upside.

Key Technical Indicators:

Moving Averages: The stock price is trading well above the 20-month and 50-month moving averages, indicating a sustained bullish trend.
Volume Analysis: The surge in volume during the breakout reinforces the strength of the move, suggesting that the stock is under accumulation by institutional investors.
Resistance and Support: Having broken through the previous resistance level, the next potential target could be ₹100, with strong support at ₹64.25.
4. Financial Highlights
Revenue Growth: RGIPL has seen consistent revenue growth, with a sales figure of ₹557.03 crores in FY 2024, up from ₹452.51 crores in FY 2023.
Profitability: The company has maintained a healthy EBITDA margin, reflecting efficient cost management and operational efficiency.
Leverage: With a debt-to-equity ratio that has decreased over the years, RGIPL is well-positioned to manage its financial obligations and fund future expansions.
5. Strategic Growth and Sustainability
RGIPL is focused on sustainable growth, integrating renewable energy sources such as wind and solar power into its operations. The company’s commitment to a zero-liquid discharge policy and efficient scrap processing highlights its dedication to environmental stewardship. These initiatives not only reduce operational costs but also enhance the company’s reputation as a socially responsible entity.

Key Milestones:

2019: Installation of a 20 MT induction furnace, doubling billet production capacity.
2023: Commencement of a continuous stand rolling mill, further increasing TMT Bar production capacity.
Future Plans: The company aims to become entirely energy self-sufficient by 2029, relying solely on renewable energy sources.
6. Conclusion
Rudra Global Infra Products Ltd. is strategically positioned to capitalize on the growing demand for steel in India, particularly in Gujarat. With its integrated operations, focus on sustainability, and recent technical breakout, RGIPL presents a compelling investment opportunity. The company’s strong financials, continuous capacity expansion, and diversification into new sectors like aerospace and defense further bolster its growth prospects.

Investment Thesis:

Bullish Outlook: The recent technical breakout and volume surge suggest a strong bullish outlook, with potential targets in the ₹100 range.
Long-Term Growth: RGIPL’s focus on backward and forward integration, along with its sustainable practices, positions it well for long-term growth in the Indian steel industry.
Recommendation:

Buy: Given the technical setup and strong fundamentals, RGIPL is a recommended buy for long-term investors looking to capitalize on growth in the Indian steel sector.

Disc: no investment as of now , however may add position if breakout sustain , if closes below previous month - exit sign

No recommendation

Source: Investor's presentation