PSL Limited is the largest manufacturer of high grade large diameter Helical Submerged Arc Welded (HSAW) pipes in India. The company manufactures & supplies pipes certified to API (American Petroleum Institute) standards for oil, gas as well as water transmission projects. PSL has a total manufacturing capacity of 1,475,000 MT per annum.
Value and Recommendation
At CMP of Rs 174, the stock is trading at 7.3x & 5.2x its FY10 & FY11 earnings of Rs 23.7 & Rs 33.3 respectively. With the company consolidating its position as the largest manufacturer of HSAW pipes in India coupled with the strong order book & positive industry outlook, we recommend a BUY on the stock at current levels with a price target of Rs 250, an upside of more than 44% for a time horizon of 9 to 12 months