Incorporated in 1973, Mishra Dhatu Nigam Ltd (MIDHANI) is Hyderabad based PSU engaged in the business of manufacturering of special steels, superalloys and titanium alloys in India. These high value products cater to niche sectors including defense, space and power. Company is Mini Ratna, Category-I company since 2009.
Most advanced and unique facilities
MIDHANI is the only facility in India to carry out vacuum based melting and refining through world class vacuum melting furnace such as vacuum induction melting, vacuum arc remelting, vacuum degassing / vacuum oxygen ecarburisation, electro slag remelting and electron- beam melting. It enables the company to venture new markets with innovative and advanced products. The company has successfully produced Hafnium metal having vital application in the space sector for the first time in the country using state of the art electron beam melting furnace. Also, they have manufactured large nickel superalloy based casting through air induction melting route.
Capability to manufacture wide range of advanced products
MIDHANI is a manufacturer of special steels and stainless steels, Superalloys (nickel base, iron base and cobalt base), commercially pure titanium and titanium alloys, soft magnetic alloys, controlled expansion alloys, heat resistance alloys, special purpose alloys, refractory metals and other alloys in different shapes, properties and sizes. MIDHANI is in a unique position to leverage both economies of scale and scope as they are capable of processing different alloys. Some of the alloys that they manufacture have properties higher than international standards to meet specific requirements of their customers primarily engaged in defence, space, aeronautics, power and thermal power etc.
Strong long term customer relationships
MIDHANI have a strong and an established relationship with their customers. They have partnered with many of their key customers in the product development process, enabling their products to meet the exact specifications provided by the customers and to ensure repeat orders. The trust of their customers is manifested through customer funded capital investments at the company. As on September 30, 2017, customer funded assets constitute Rs 66 crore out of the total gross block of the company of Rs 365.39 crore.
MIDHANI has reported a CAGR of 8.1% and 7.7% on revenue and net profit fronts respectively over FY2013-2017. On its upper band of price of Rs 90, the issue is priced at PE ratio of 13.3x of its FY2017 EPS of Rs 6.7. We believe MIDHANI's unique business model and marquee client base makes it a lucrative long term stock. Hence, we recommend to Subscribe the IPO.