SINCE 1986
Janaury 2024
Company Name : KALYANI STEELS LTD.
BSE Code : 500235
Time Duration : 2 year
CMP : `597.40 (as on 11 January 2024)
Target Price : `777
About Company Industry Outlook
Established in 1973, Kalyani Steels Ltd (KSL) is a part of the The Indian steel industry is a key driver of the country’s economic
Kalyani Group, headquartered in Pune, Maharashtra. Under the growth. The surge in demand for domestic steel is fuelled by
leadership of B. N Kalyani, who serves as the chairman of the government-led infrastructure projects, a rise in housing needs,
Kalyani Group of companies, KSL operates its manufacturing and the recovery of the auto sector to pre-COVID levels. With the
facility in Ginigera village, Koppal (Karnataka). Specialising in current production and capacities, the steel sector accounts for
forging and engineering high-quality carbon and alloy steel, KSL approximately 2 per cent of the GDP. Envisaging the future, the
serves diverse sectors such as automotive, oil & gas, energy, National Steel Policy of 2017 aims for India’s steel production to
bearings, seamless tubes, and railways. It holds a prominent reach 300 million tons by 2030, indicating an anticipated further
position as a preferred steel supplier for the engineering, increase in the steel industry’s contribution to the GDP.
automotive, seamless tube, and primary aluminium industries,
catering to the needs of the automobile and engineering sectors.
Automotive Industry
Growth momentum is expected to continue even in the current
KSL operates a cutting-edge integrated manufacturing facility
year as PV & CV driving the growth of Auto sales, while 2W & 3W
spanning 375 acres in Hospet, Karnataka. The installed capacity
catching to pre-pandemic levels. As per various rating agencies,
of Hospet Steels Limited (HSL) stands at approximately 7,00,000
the Automotive industry is expected to grow by around 7-9 per
metric tonnes per annum. KSL and Mukand Limited (ML), a part
cent in FY 2024. The automobile industry’s overall retail sales
of the Bajaj group, have formed a strategic alliance, sharing
rose 21.1 per cent YoY in December 2023 to 19.9 lakh units. Two-
manufacturing facilities. KSL possesses a 41.38% stake in the wheeler and car retail sales also went up by 27.6 per cent YoY
assets, while ML owns the remaining portion. to around 14.5 lakh units and 2.7 per cent YoY to 2.9 lakh units,
respectively. All segments of the industry observed a YoY rise
Product Portfolio
during this period.
Kalyani Steel Ltd specializes in high-quality steel bars for
automotive and engineering applications. They craft engine Renewable Energy
components, transmission parts, axle beams, steering knuckles, Annually, approximately 12-15 gigawatts (GW) of renewable
and bearings for cars, trucks, and construction equipment. energy (RE) capacity is being incorporated into the nation’s
Additionally, their medium and high carbon, alloy, and micro- infrastructure. According to India’s Nationally Determined
alloyed steels serve diverse industries like energy, railways, Contributions (NDC), the goal is to achieve a renewable power
and earthmoving. Offering customisable solutions, strict quality capacity of 500 GW by 2030, a substantial increase from the
standards, and a commitment to sustainability. current capacity of around 170 GW. This presents a considerable
opportunity for the growth of steel demand in the country.
Clientele
The company has many established companies from various Construction & Infrastructure
industries in its client list which includes, Dana Spicer, Eicher, The government has unveiled an extensive capital allocation of
Hyundai, Tata, Renault, Ford, Force Motors, Maruti Suzuki and ₹10 lakh crores for the fiscal year 2024, earmarked for large-
many more. scale infrastructure projects to be executed over five years. This
Continued On PG 2...
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DSIJ Pvt. Ltd. : Office no 211, Vascon Platinum Square, Next to Hyatt Regency, Vimannagar, Pune- 411014 I For Customer Service : 020-66663-802/803 OR [email protected]
Registered Office Address: 419-A, 4th Floor, Arun Chambers, Tardeo, Next to AC Market, Mumbai - 400034
CIN No. : CIN-U22120MH2003PTC139276 SEBI Research Analyst - INH000006396 DSIJ INVESTMENT ADVISORY UNIT (CRU)
SINCE 1986
Janaury 2024
focus on infrastructure-driven economic growth is poised to stood at Rs 78.46 crore compared to Rs 82.22 crore during the
substantially elevate the demand for steel in the country. last quarter and the same during the corresponding quarter of
last year was at Rs 46.24 crore.
Growth Opportunities
n The Company continues to focus on Approvals and New Recent Financial Ratios:
Product Development with major OEMs in Domestic and n ROCE (%) – 13.3
International spaces. n ROE (%) – 11.7
n Company has recently acquired assets of “Kamineni Steel n D/E (x) – 0.17
& Power India Private Limited” which will also help the n Interest Coverage (x) – 10.4
company expand its operational capacity.
n Dividend Yield (%) – 1.92
n The Company has planned to set up a 2,00,000 TPA Non-
n Promoter Holding (%) – 64.7
recovery/Heat recovery, stamp charge Coke Oven with
Modified wet Quenching of hot coke and a 17 MW captive n Pledged (%) – 0
power plant. The budget at cost is expected to be close to
Rs 276 crores to be funded by way of debt and internal
accruals. Valuation and Outlook
n It also has a strategic alliance with Mukand Limited (part If we look at the current valuations, shares of the company are
of the Bajaj group) where the manufacturing facilities trading at the Price-to-earning of 11.4x When compared to the
are shared, with Kalyani Steels holding 41 per cent of the industry PE of 22.8x and the price-to-book ratio of 1.6x seems
assets and ML holding the remaining. reasonable when compared to the industry average which is
at 2.6x. If we look at the market cap-to-sales ratio it currently
Recent Financial Performance stands at 1.39 times which is also comparatively lower than most
In Q2FY24, the company reported consolidated revenue of its peers.
of Rs 480.07 crore dropped by around 4 per cent on a YoY The company is committed to increasing the shareholder’s value
basis compared to Rs 500.33 crore from the previous year’s through its cost-effective business structure, improvement
corresponding quarter, while sequentially also declined by in quality, continuous enhancement of energy efficiency etc.
around 3 per cent per cent. However, Its PBIDT (Excl OI) has Initiatives in these areas have always helped the Company to
increased by 82.24 per cent to Rs 93.09 crore which was Rs 51.08 stand out among its peers. Overall, at present valuation company
Crore during the previous year’s same quarter, sequentially it is looking reasonably valued. Taking into account the growth
has almost remained flat. However, the PBIDT (Excl OI) margin prospects of the industry and the well-established position of
has shown an improvement in the recent quarter. Net profit the company, we recommend a BUY with a target price of Rs 777.
Inc/Exp Statement (Rs. in Crores )
Description Mar - 23 Mar - 22 Mar - 21 Mar - 20 Mar - 19
Net Sales 1,899.35 1,706.03 1,187.99 1,198.93 1,406.58
Total Income 1,955.76 1,752.39 1,230.53 1,222.19 1,420.11
Total Expenditure 1,653.70 1,367.46 924.57 1,003.63 1,194.51
PBIDT 302.06 384.92 305.96 218.56 225.60
PAT 167.03 242.92 190.30 137.12 132.05
Dividend % 200.00 200.00 150.00 100.00 100.00
Adj. EPS(Rs) 38.26 55.65 43.59 31.41 30.25
Continued On PG 3...
Investment in securities market are subject to market risks. Read all the related documents carefully before investing.
“Registration granted by SEBI, membership of BASL (in case of IAs) and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors
DSIJ Pvt. Ltd. : Office no 211, Vascon Platinum Square, Next to Hyatt Regency, Vimannagar, Pune- 411014 I For Customer Service : 020-66663-802/803 OR [email protected]
Registered Office Address: 419-A, 4th Floor, Arun Chambers, Tardeo, Next to AC Market, Mumbai - 400034
CIN No. : CIN-U22120MH2003PTC139276 SEBI Research
Registration
Analyst
No: INA000001142
- INH000006396 DSIJ INVESTMENT ADVISORY UNIT (CRU)
SINCE 1986
Janaury 2024
Quarter On Quarter (Consolidated) (Rs. in Crores)
Particulars Sept - 23 June - 23 QoQ Var % Sept - 22 YoY Var %
Net Sales 480.07 496.84 -3.37 500.33 -4.05
Total Expenditure 386.99 404.41 -4.31 449.25 -13.86
PBIDT (Excl OI) 93.09 92.43 0.72 51.08 82.24
PAT 58.32 61.25 -4.78 34.62 68.47
PBIDTM% (Excl OI) 19.39 18.60 4.25 10.21 89.91
PBIDTM% 21.28 21.11 0.81 12.76 66.77
PATM% 12.15 12.33 -1.46 6.92 75.58
Adj. EPS(Rs) 13.34 14.01 -4.78 7.92 68.43
**Track calls using our new investor app
Investment in securities market are subject to market risks. Read all the related documents carefully before investing.
“Registration granted by SEBI, membership of BASL (in case of IAs) and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors
DSIJ Pvt. Ltd. : Office no 211, Vascon Platinum Square, Next to Hyatt Regency, Vimannagar, Pune- 411014 I For Customer Service : 020-66663-802/803 OR [email protected]
Registered Office Address: 419-A, 4th Floor, Arun Chambers, Tardeo, Next to AC Market, Mumbai - 400034
CIN No. : CIN-U22120MH2003PTC139276 SEBI Research
Registration
Analyst
No: INA000001142
- INH000006396 DSIJ INVESTMENT ADVISORY UNIT (CRU)
SINCE 1986
Janaury 2024
DISCLAIMER & DISCLOSURE:
This report has been prepared by DSIJ Private Limited and is meant for sole use by the recipient and not for circulation. For all content
we have relied upon and assumed, without any independent verification, accuracy and completeness of all information available in
public domain or from sources considered reliable. The content contains certain assumptions and views, which DSIJ considers rea-
sonable now, and which are subject to change. Computations adopted are indicative and are based on current market prices and
general market sentiment. No representation or warranty is given by DSIJ as to the achievement or reasonableness or completeness
of any idea and/or assumptions. The content does not purport to contain all the information that the recipient may require. Recipi-
ents should not construe any of the contents herein as advice relating to business, financial, legal, taxation, or other matters and they
are advised to consult their own business, financial, legal, taxation and other experts / advisors concerning the company regarding
the appropriateness of investing in any securities or investment strategies discussed or recommended and should understand that
statements regarding future prospects may not be realized. It may be noted that investments in equity and equity-related securities
involve a degree of risk and investors should not invest any funds unless they can afford to take the risk of losing their investment. In-
vestors are advised to undertake necessary due diligence before making an investment decision. For making an investment decision,
investors must rely on their own examination of the Company including the risks involved. Investors should note that income from
investment in such securities, if any, may fluctuate and that each security’s price or value may rise or fall. Accordingly, investors may
receive back less than originally invested. Mutual Funds Investments are subject to market risk. Please read the offer and scheme
related documents carefully before investing. This document may not be reproduced, distributed or published in whole or in part,
directly or indirectly, for any purposes or in any manner.
n Neither DSIJ nor any of its employees shall be liable for any direct, indirect, special, incidental, consequential, punitive or exempla-
ry damages, including lost profits arising in any way from the information contained in this material. The content does not con-
stitute an offer for sale, or an invitation to subscribe for, or purchase equity shares or other assets or securities of the company
and the information contained herein shall not form the basis of any contract. It is also not meant to be or to constitute any offer
for any transaction.
n DSIJ or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party
in connection with preparation of the research report.
n Subject company may have been client of DSIJ or its associates during twelve months preceding the date of publication of the
research report.
n DSIJ or its associates may have received compensation from the subject company in the past twelve months.
n DSIJ or its associates have not managed or co-managed public offering of securities for the subject Company in the past twelve
months.
n The Research Analysts of the company have not served as an officer, director or employee of the subject Company.
n The Research Analysts or the Company have not been engaged in market making activity for the subject Company.
n Research analyst or his/her relatives may have actual/ beneficial ownership of 1% or more securities of the subject company at
the end of the month immediately preceding the date of publication of research report.
n DSIJ or Research analyst or his/her relatives may have financial interest in the subject company in ordinary course of business.
n DSIJ and its associate company(ies), their directors and employees may from time to time, have a long or short position in, and
buy or sell the
n securities of the company(ies) mentioned herein or may have any other potential conflict of interests with respect to any recom-
mendation and other related information and opinions.
Definitions of Terms Used in the research reports:
‘Subject company’ means the company where a recommendation is being suggested.
n Buy: The intended audience is being informed that they can consider purchasing the shares of the said company
n Sell: The intended audience is being informed that they can consider selling the shares of the said company
n Hold: The intended audience is being informed that they can consider to neither purchase or sell but continue to hold, if any, the
shares of the said company
Investment in securities market are subject to market risks. Read all the related documents carefully before investing.
“Registration granted by SEBI, membership of BASL (in case of IAs) and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors
DSIJ Pvt. Ltd. : Office no 211, Vascon Platinum Square, Next to Hyatt Regency, Vimannagar, Pune- 411014 I For Customer Service : 020-66663-802/803 OR [email protected]
Registered Office Address: 419-A, 4th Floor, Arun Chambers, Tardeo, Next to AC Market, Mumbai - 400034
CIN No. : CIN-U22120MH2003PTC139276 SEBI Research
Registration
Analyst
No: INA000001142
- INH000006396 DSIJ INVESTMENT ADVISORY UNIT (CRU)
SINCE 1986
Janaury 2024
DISCLAIMER & DISCLOSURE:
This report has been prepared by DSIJ Private Limited and is meant for sole use by the recipient and not for circulation. For all content
we have relied upon and assumed, without any independent verification, accuracy and completeness of all information available in
public domain or from sources considered reliable. The content contains certain assumptions and views, which DSIJ considers rea-
sonable now, and which are subject to change. Computations adopted are indicative and are based on current market prices and
general market sentiment. No representation or warranty is given by DSIJ as to the achievement or reasonableness or completeness
of any idea and/or assumptions. The content does not purport to contain all the information that the recipient may require. Recipi-
ents should not construe any of the contents herein as advice relating to business, financial, legal, taxation, or other matters and they
are advised to consult their own business, financial, legal, taxation and other experts / advisors concerning the company regarding
the appropriateness of investing in any securities or investment strategies discussed or recommended and should understand that
statements regarding future prospects may not be realized. It may be noted that investments in equity and equity-related securities
involve a degree of risk and investors should not invest any funds unless they can afford to take the risk of losing their investment. In-
vestors are advised to undertake necessary due diligence before making an investment decision. For making an investment decision,
investors must rely on their own examination of the Company including the risks involved. Investors should note that income from
investment in such securities, if any, may fluctuate and that each security’s price or value may rise or fall. Accordingly, investors may
receive back less than originally invested. Mutual Funds Investments are subject to market risk. Please read the offer and scheme
related documents carefully before investing. This document may not be reproduced, distributed or published in whole or in part,
directly or indirectly, for any purposes or in any manner.
n Neither DSIJ nor any of its employees shall be liable for any direct, indirect, special, incidental, consequential, punitive or exempla-
ry damages, including lost profits arising in any way from the information contained in this material. The content does not con-
stitute an offer for sale, or an invitation to subscribe for, or purchase equity shares or other assets or securities of the company
and the information contained herein shall not form the basis of any contract. It is also not meant to be or to constitute any offer
for any transaction.
n DSIJ or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party
in connection with preparation of the research report.
n Subject company may have been client of DSIJ or its associates during twelve months preceding the date of publication of the
research report.
n DSIJ or its associates may have received compensation from the subject company in the past twelve months.
n DSIJ or its associates have not managed or co-managed public offering of securities for the subject Company in the past twelve
months.
n The Research Analysts of the company have not served as an officer, director or employee of the subject Company.
n The Research Analysts or the Company have not been engaged in market making activity for the subject Company.
n Research analyst or his/her relatives may have actual/ beneficial ownership of 1% or more securities of the subject company at
the end of the month immediately preceding the date of publication of research report.
n DSIJ or Research analyst or his/her relatives may have financial interest in the subject company in ordinary course of business.
n DSIJ and its associate company(ies), their directors and employees may from time to time, have a long or short position in, and
buy or sell the
n securities of the company(ies) mentioned herein or may have any other potential conflict of interests with respect to any recom-
mendation and other related information and opinions.
Definitions of Terms Used in the research reports:
‘Subject company’ means the company where a recommendation is being suggested.
n Buy: The intended audience is being informed that they can consider purchasing the shares of the said company
n Sell: The intended audience is being informed that they can consider selling the shares of the said company
n Hold: The intended audience is being informed that they can consider to neither purchase or sell but continue to hold, if any, the
shares of the said company
Investment in securities market are subject to market risks. Read all the related documents carefully before investing.
“Registration granted by SEBI, membership of BASL (in case of IAs) and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors
DSIJ Pvt. Ltd. : Office no 211, Vascon Platinum Square, Next to Hyatt Regency, Vimannagar, Pune- 411014 I For Customer Service : 020-66663-802/803 OR [email protected]
Registered Office Address: 419-A, 4th Floor, Arun Chambers, Tardeo, Next to AC Market, Mumbai - 400034
CIN No. : CIN-U22120MH2003PTC139276 SEBI Research
Registration
Analyst
No: INA000001142
- INH000006396 DSIJ INVESTMENT ADVISORY UNIT (CRU)
