How the Russian-Ukrainian war helped this Thane-based company become a multibagger

  • Maharashtra Seamless is the manufacturer of pipes and tubes and has more than doubled its investor’s investment in the past year.
  • One aspect of the growing interest in the company’s stock is due to the increased stakes of promoters, FIIs and DIIs.
  • The company is the market leader in the domestic seamless tube segment with 55% market share.

Pipe and tube maker Maharashtra Seamless has doubled investors’ money in the past year due to rising interest from developers and crude oil prices and the war between Russia and Ukraine.

Based in Thane, Maharashtra, Maharashtra Seamless manufactures pipes and tubes and has also branched out into renewable energy generation through solar and wind power in Maharashtra and Rajasthan.

But it’s not renewables but high crude oil prices that have improved its outlook. It exports seamless pipe for crude oil transportation and the March and June quarters were particularly good for the company as crude oil prices soared to over $100 a barrel.

“Rising crude oil prices generally accelerate exploration and production activities in the United States, Canada and the Middle East. The Russian-Ukrainian crisis presents opportunities for domestic pipe manufacturers, especially for the supply from Europe. Management expects strong demand from the export segment to continue as it has received higher demands in the recent period,” HDFC Securities analysts said during the cover launch.

The company, part of the DP Jindal Group, mainly caters to the oil and gas sector, but also supplies power plants, boilers, fertilizers, chemical, pharmaceutical and automotive engineering products.

Details Q1 FY23 Q1 FY22 % change
Total income ₹1,352 crore ₹721crore 87%
net profit ₹153,000,000 ₹96 million 59%

Disruption means novelty
Analysts believe that the Russian-Ukrainian war has disrupted the global supply chain. As Europe tries to reduce gas imports from Russia and find new sources – this would lead to new sources of gas and crude – meaning more business for the company – as new infrastructure is built.

“It offers new products such as high-end subsea pipelines and connecting pipelines domestically and engages stockists in overseas cargo-friendly markets to capture a larger share of the export market. The outlook is promising given its potential to tap into the export market and the growing demand for its product,” says Manoj Dalmia, Founder and Director of Proficient Equities.

It also has major domestic clients like Indian Oil Corporation, BHEL, Reliance Industries, ISGEC, NTPC, Larsen & Toubro, Adani, DLF, Indrapastha Gas and Unitech. And this business is growing too.

“The business model of the company looks great both in the domestic market and abroad. In the domestic market, the government has focused on supplying LPG through gas pipelines,” said Ravi Singhal, CEO of GCL Securities, to Business Insider India.

Details FY20 FY21 EX22 FY22 estimate Estimate for FY23
Revenue ₹2,644 crore ₹2,308 crore ₹4,200crore ₹4,588crore ₹5,120,000
net profit ₹392,000,000 ₹324 crore ₹433crore ₹514,000 ₹594crore

Analysts expect strong orders from the pipe maker in the coming days for oil, gas and oil pipelines from countries like the Middle East and Europe. “MSL products have strong export demand given its capabilities to manufacture API-certified pipe. Going forward, approximately 30-40% of volumes would meet export demand. export coupled with a relatively better margin profile would help improve its EBITDA margins,” HDFC Securities said.

Brokers also expect crude prices to remain at high levels over the medium term, which would translate into healthy volumes for seamless tube makers.

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