Buy Man Industries for target price of ₹660 (47.3% upside) says SBI Securities

[Pee Vee]

Man Industries India Ltd. (MAN) is one of the largest manufacturers and exporters of large diameter carbon steel line pipes (LSAW, HSAW and ERW). These pipes are used for various high-pressure transmission applications in the Oil & Gas, Petrochemicals, Water, Dredging & Fertilisers, Hydrocarbons and CGD sectors. With over 3 decades of presence in the pipe industry, the company’s manufacturing capital boasts of 2 state-of-the-art manufacturing facilities located in Anjar, Gujarat and Pithampur, Madhya Pradesh, having a total installed capacity of over 11,75,000 Metric Tonnes Per Annum (MTPA). Both these plants are strategically located and cover a total area of ~180 acres. These facilities hold internationally accepted quality standards laid down by the American Petroleum Institute (API), which is a mandatory requirement to produce high pressure line pipes for hydrocarbon applications, owing to which MAN caters to a number of Oil & Gas majors domestically and internationally such as IOCL, HPCL, BPCL, SHELL, Kuwait Oil Company, etc. The company has a strong global customer reach spread across 30+ nations.

Going ahead, we believe Man Industries Ltd has stellar growth potential on the back of (a) Foray into high margin Stainless Steel Seamless Pipe segment with a 20,000 MTPA facility, (b) Strategic expansion in Saudi Arabia with a 3,00,000 MTPA HSAW Pipe plant; Total installed capacity to increase by 27.2% YoY to 14,95,000 MTPA in FY26E, (c) Healthy business relations with marquee clients across the public and private domain through API-certified operations and (d) Blended EBITDA/tonne to improve with change in product mix.

We expect Revenue/EBITDA/Net Profit to grow at a CAGR of 20.9%/35.0%/38.1% between FY25-FY28E to Rs.6,199 cr/Rs.741 cr/Rs.404 cr respectively. At a CMP of Rs 448, the stock is trading at 19.3x/12.6x/8.5x P/E multiple based on expected EPS of Rs 23.2/Rs 35.5/Rs 52.8 for FY26E/FY27E/FY28E respectively. We have valued the business at 15x P/E multiple based on its FY27E earnings and 12.0x EV/EBITDA (higher EV/EBITDA multiple assigned on back of transition from LSAW/HSAW pipes to Stainless Steel Seamless Pipes) with equal weightage and arrive at a target price of Rs.660, thus providing an upside potential of 47.3% and assign a BUY rating for the stock.