Electrosteel Castings Ltd. (ECL), jointly promoted by Orissa Cement Ltd, Dalmia Cement Ltd and Mr G. Kejriwal was incorporated as Dalmia Iron and Steel Company in 1955. The company started by producing steel castings and cast iron pipes at Khardah, West Bengal. The company set up its second unit at Ghaziabad for the manufacture of ingots, billets using scrap recycling technology. In 1981-82, the company acquired Sakti Pipes Ltd located at Elavur near Chennai, and thereby augmented its CI spun pipes capacity. In 1991-92 the company made a foray into Ductile Iron spun pipes (DI pipes). In 1995 the company came out with a PCD issue to enhance its DI pipes manufacturing capacity and also to backward integrate into pig iron, an essential raw material in the manufacture of pipes.

The company has reported impressive results during Q3 FY02. Net profit has shot up by 138% yoy to Rs171.1mn while net sales soared by 11% to Rs1.1bn in the same period. Growth in PBT was even more impressive at 44%, and tax outgo increased sharply by 60%. Superior cost management was the sole driver.

The positive point is that the company has a marginal debt burden while this sector has a higher debt equity ratio. Currently, the book order position is satisfactory. This may lead to significant growth in the coming quarter. The company has a strong book value of over 185 after declaring a 1:1 bonus and annualized EPS at Rs42. Currently, it is trading at Rs137 and is likely to give handsome returns in the short to medium term period.

Paisa team

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