MUGHAL: Power woes to settle by FY19; upgrade to Buy
- We revise up our TP for MUGHAL to PkR150/sh and upgrade our rating to Buy led by our expectation that its power constraints will be considerably resolved beyond FY18. Intermittent power supply was the single biggest impediment hampering MUGHAL’s sales/earnings growth despite construction boom in the country.
- MUGHAL has planned to add a 19MW LNG-fired CPP by FY19, which will take total power supply at its disposal to 48MW. We believe this will enable the company to almost completely alleviate dependence on external billets and thereby protecting itself from impact of higher duty on billets.
- Further positive triggers remain intact on the back of the BMR on the re-rolling facility, which we understand will lead to cost efficiencies. While we await clarity from management on nature and extent of these efficiencies, we highlight this as an upside trigger to our estimates.
Mughal Iron & Steel Industries Ltd. Mughal Iron & Steel Industries Limited is engaged in manufacturing and trading of mild steel products. The Company is engaged in producing steel in the long-rolled steel products, which has a capacity of 688,000 metric/tons of re-rolled steel per annum. The Company is engaged in multidimensional activities from making billets of mild steel, spring steel, deformed bar, re-bar, cold twisted rebar and a range of sections, such as I-beams, L-sections, C-section, H-beams and T-bar. The Company offers its products under various categories, including Smelting, such as Ferro Silicomanganese, Ferro Chrome and Ferro Silicon; Billet, such as Mild Carbon Billets, Spring Steels, Austentic Stainless Steel, Ferrite Stainless steels and Alloys Steels; Bars, including Deformed Bars, Re-inforcement Bars and Thermax Bars; Beams, including I Beams (Girders), Angle Section (L Section), T Bar (T section) and C Channel, and Grade and Specifications, including ASTM A 615 G-40 and ASTM A 321.
Intermarket Securities Limited (IMS) is a full service corporate brokerage firm based in Karachi, Pakistan. We service both domestic and international clients. IMS was ranked #2 Best Local Brokerage and #3 Best for Overall Country Research for 2016 by AsiaMoney.
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