Navratna SIP on Zee Business: In a special edition of Navratna SIP, Zee Business research analyst Ashish Chaturvedi recommended Electrosteel Castings for investment.

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Zee Managing Editor Anil Singhvi discussed today’s stock pick with Senior Research Analyst, Ashish Chaturvedi. Ashish’s stock pick for today is Electrosteel Castings Ltd.

Ashish said that the company manufactures ductile and cast-iron pipes and has a good standing in India. It also has business in the UK, Europe, and Gulf countries. The export volume of the company is 20-25% and the merger with Srikalahasthi pipes will help the company expand by 125%. The Ductile Iron and strength of casting pipe is 7.2 lakh million tons per annum. The company has a market share of 31% in India.

He said that it is an advantage to the company as the metal prices are declining and metal is the raw material used in casting. Also, the government's Jal Jeevan mission is helping in increasing new order flows because of which the company’s income is expected to increase.

The company’s valuation is good as well at a 235-crore market cap. Price to book value is 0.5 times, 0.3 times is market cap to sales. It is a cash-rich company with Rs 9 share with a recent price of 25-30% is the cash value. In the last 5 years, the profit track record is at 23% CAGR and the growth is expected to continue.

According to Zee Business Managing Editor Anil Singhvi, the company’s strength is in water projects and the budget is also expected to focus on such projects. The company’s revenue is Rs 3,500 lakh and revenue visibility is great. It is a good investment pick. The short-term target should be Rs 50 to 60 and the 2-3 years target should be Rs 75 to 100. The financial performance will flourish after the merger.