India's largest fully-integrated producer of ferrochrome, Indian Metals & Ferro Alloys is also set to witness a boost in the September 2010 quarter profit. During the similar period of the past year, the company was suffering from lower sales and high input costs, eroding its operating profit margins and incurring a net loss.
The scene is totally different now. The company is increasing its capacity utilisation as volumes are growing, while the international ferrochrome prices have improved. Its acquisition of Utkal Manufacturing's 40,000-tonne capacity in FY10 is adding to revenues. Our estimates for the company's September 2010 quarter are quite bullish with a net profit target of 60 crore. This will take the trailing 12-month profits to 165 crore and bring down its valuation to just 11.6 times.
The company is also expanding its ferrochrome production capacity by another 40,000 tonnes and increasing its power generation capacity by 30 mw, which are expected to start operation from October and November 2010, respectively.
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