Saturday, September 12, 2009

Buy - Usha Martin

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The company is the world’s second largest steel wire rope manufacturer. It is integrated as it has coal and iron ore mines. Steel volumes are expected to be higher sequentially in 2QFY10. The company has started exporting iron ore again as it becomes economically viable at current prices and has already sold ~100,000 tonnes till now in FY10. It produces its own power. Here also it is increasing the capacity so that it will reach about 114 MW by FY11.

Hence it is a company which is going to have a huge saving on cost going ahead. The stock currently trades at 10.0x and 7.7x of its FY10E and FY11E earnings, respectively. We recommend buying the stock with price target of Rs 90. (10x of FY11E EPS)