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[Sumans_Fan]

Jindal Saw Ltd. (Rs.612) follows a multi-product approach to pipes - offering a full product portfolio of LSAW (longitudinal submerged arc welded), HSAW (helical submerged arc welded), seamless, DI pipes, anti-corrosion coatings, connector casings and Hot reduction Bends. Its product portfolio allows it to comfortably straddle between value-driven products (DI and seamless pipes, which are high-margin segments) and volume-driven ones (SAW pipe business).

Besides LSAW and HSAW, it is increasing its focus on the water infrastructure sector in India. The company is currently one of the very few pipe manufacturers capable of offering a complete pipes solution to the water sector (i.e. spiral pipes, ductile pipes and accessories). The DI pipe business gives the company an opportunity to take advantage of the strong domestic capital expenditure cycle seen in the water transportation segment in India. A combination of increasing government focus to build water infrastructure and the rising support from multilateral agencies (such as the World Bank and the Asian Development Bank) is likely to result in a strong demand for DI pipes. The company is implementing capacity expansion in all three key segments on expectation of overall margin expansion.

The company has firmly established itself as a credible supplier in the global market. This is reflected in the large and reputable client accreditations that the company has been able to garner in the past few years. Its current order book exceeds US $1 billion (Rs.4000 cr.) with export orders of more than 65%.

In the domestic market, the company has bagged the prestigious and unique project from Cairn Energy India Pvt. Ltd. (Cairn) involving supply of LSAW line pipes for the world’s longest underground pre-insulated heat traced pipeline. The order value exceeding US $200 million (Rs.800 cr.) is for supply of line pipes, Tracer Tube, Insulation and Bends for Barmer Salaya Pipe Line (BSPL) project of Cairn.

The company divested its interest in its US subsidiary in the financial year ended 31st December 2007. The consideration allows the company to pursue its expansion and debottlenecking plans and make other investments for better margins/returns in USA.

It has investments of Rs.17 cr. while their market value is around Rs.235 cr. The fundamentals of the company are very encouraging as it has strong book value of Rs.371, EPS of Rs.63, trading at P/E ratio of just below 10 against its yearly high of Rs.1225; the stock is available at around Rs.620 level. Investors can add this stock on every dips for good long-term growth.