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Maharashtra Seamless up 10%, hits new high on stock split, bonus issue plan

Shares of Maharashtra Seamless hit a new high of Rs 910 on soaring 10 per cent on the BSE in Thursday’s intra-day trade in an otherwise weak market, as the company proposed a stock split and bonus issue plan.

Maharashtra Seamless on Wednesday after market hours announced that the board of directors at its meeting scheduled to be held on Monday, October 17, 2022 will also discuss and consider inter-alia, issue of bonus shares and sub division/split of the company’s existing equity shares of Rs 5 each.

Earlier, on October 7, the company had informed stock exchanges that board meeting will held to consider and approve the un-audited financial results for the quarter and half year ended September 30, 2022.

The stock of iron & steel product producer surpassed its previous high of Rs 850.85, which it hit on September 19, 2022. At 11:59 AM, the stock traded 8 per cent higher at Rs 893.35, as compared to 0.98 per cent decline in the S&P BSE Sensex.

In the past one year, the stock price of Maharashtra Seamless has appreciated by 100 per cent, as against 6 per cent decline in the benchmark index, on robust financial performance and strong order book position. The company said capacity utilisation of pipe segments will improve in FY2022-23 due to improved efficiency and strong demand.

The company primarily manufactures seamless pipes with an estimated production capacity of 450,000 TPA2 and ERW pipes with an estimated capacity of 125,000 TPA1 across its manufacturing facilities at Raigad in Maharashtra. Further, the entity acquired under the Insolvency and Bankruptcy Code (IBC) proceedings in FY2019, USTPL, has a seamless pipe manufacturing capacity of 2,00,000 TPA. Apart from the seamless and ERW pipes business, MSL has developed a renewable (solar/ wind) power portfolio of 59.5 MW capacity across Maharashtra and Rajasthan.

The seamless & ERW pipes sector is getting a major boost from Make in India and Atma Nirbhar Bharat policy. Under this policy, for any purchases made by PSUs, there must be a minimum 35 per cent local value addition in supply of pipes which benefits domestic manufacturers.

Last month, rating agency ICRA upgraded the long term credit rating and reaffirmed the short-term rating of the company’s bank facilities with a stable outlook.

The long-term rating upgrade factors in the Company’s stellar performance in FY2022 undeterred by 2 waves of COVID-19 coupled with an improvement in its liquidity position. The rating upgrade also factors in the Company’s reduced focus on non-core businesses and deleveraging guidance. The ratings assigned indicate high degree of safety regarding timely servicing of financial obligations and very low credit risk, Maharashtra Seamless said in exchange filing.

ICRA expects MSL to report healthy revenues and earnings in the medium term, supported by its leadership position in the domestic seamless pipes sector, healthy order book position, presence in the high value-added, large-diameter pipe segment, which faces relatively lower competition, and its status as a registered vendor for major domestic oil producers and refiners. The company also continues to benefit from the extension of anti-dumping duty on the imports of seamless pipes, for five years in October 2021.

Meanwhile, on outlook, Maharashtra Seamless said the strategy of the Company has been realigned to increase focus on pipes and renewable energy segments and reduce exposure to other segments. Internal accruals are currently being utilised for working capital requirements and going forward will be utilised for debt reduction and growth opportunities.

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