Prakash Industries surged 14.41% on 19th July 2017 after its FY18 Q1 result announcement. The Company registered a PAT jump of 73% QoQ and 323% YoY. For Jun’17 Quarter Company posted a net profit of Rs. 59.41 Crs where in Last Quarter Mar’17 the company reported PAT was Rs. 34.31 crs and same quarter last year PAT was Rs. 14.04 crs .
Total number of 61 institutions has investment in Prakash Industries as on 31st March 2017. Out of 61 institutions 8 are Mutual Funds, 15 are Financial Institutions/ Banks, 2 are Insurance Companies and 36 are Foreign Venture Capital Investors.
Prakash Industries has core competence in areas like Mining, Steel and Power. Prakash Industries Ltd. (NS:PRKI) is speedily gaining its place in the Indian steel industry. The company has become a key producer of value added steel products in the country.
Prakash Industries has developed itself in diverse range of products. The company has shown rapid growth with its strong financial and trusted foundations. Bright future outlook of metal industry in India have helped the Company’s ability to stay well aligned with the economic trends and the market needs in the country.
Company has made following business development in FY16-17
Additional Sponge Iron & Power Co-generation capacity:
Successfully commissioned and stabilized new Sponge Iron Rotary Kiln and Power Co-generation capacity. This will result in improved margins from Q2FY18 onwards.
Securing Additional Long Term Coal Linkages
Secured additional Long Term Coal Linkages of 0.57 million tonnes from Coal India Limited (NS:COAL) for captive power plant. This will result in improved margins from Q2FY18 onwards. Total quantity secured through linkages stands at 13.25 lac tonnes p.a. for the next 5 years.
Positive GST Effect
Despite destocking by customers due to GST, sales volume in Q1FY18 was maintained at 1.94 lac tonnes as compared 1.89 lac tonnes in Q1FY17.
Demerger of PVC Pipes Division Engaged with Pricewater house Coopers (PwC) as advisors for Demerger of PVC Pipes Division. Scheme is under preparation.
Allotment of Equity shares to FCCB holders
During the Q1FY18, Company allotted 99,10,606 equity shares pursuant to the conversion option exercised by certain FCCB holders.
Reduction in debt liability on account of conversion of FCCBs into Equity Shares Debt has reduced, so far, by Rs 92 cr on account of conversion of FCCB. The company had issued US$ 17.85 mn FCCB in Sep-15, out of which, US$ 14.5 mn bonds have since been converted.
Prakash Industries Product:
Sector Analysis
1. Build a globally competitive industry with a crude steel capacity of 300 MT by 2030-31
2. Increase per Capita Steel Consumption to 160 Kg by 2030-31
3. Domestically meet entire demand of high grade automotive steel, electrical steel, special steels and alloys for strategic applications by 2030-31
4. Become net exporter of steel by 2025-26
5. World leader on energy and raw material efficient steel production by 2030-31
6. Develop and implement quality standards for domestic steel products Development of power evacuation infrastructure Focus.
Prakash Industries Highlight
1. Fully Integrated steel plant at Chhattisgarh
2. Produces steel through coal based Sponge Iron Route ; Technical collaboration with Lugri GmbH, Germany
3. Secured Supply of Key Raw material – (i) Iron Ore through allotted mines in the state of Chhattisgarh & Odisha (ii) Coal through long term linkage from Coal India
4. 230MW captive power plant at its integrated steel plant
5. PVC pipes & fittings- Strong brand presence in North India.
Dynamic Recommends Buy in Prakash Industries at Rs. 132 with target of Rs. 190.
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