Rama Steel Tubes Limited Well-Positioned to Leverage Strong Domestic Steel Demand

Rama Steel Tubes Limited (RSTL) (BSE: 539309, NSE: RAMASTEEL) is a pioneer and leading manufacturer in the steel tubes & pipes. The company is strategically wellpositioned to leverage strong domestic steel demand by increasing a Manufacturing Capacity ~ AT ANANTPUR, ANDHRA PRADESH through its Wholly Owned Subsidiary "Lepakshi Tubes Private Limited"

The company is strategically well- positioned to leverage strong domestic steel demand from key steel consuming sectors such as real estate, infrastructure and automobiles. The increased domestic demand along with softer material prices expect to positively boost the industry.

The structural steel pipes industry is an integral part of India's infrastructure and construction sectors, providing the backbone for a wide range of projects, from bridges and buildings to oil and gas pipelines. With the government's emphasis on infrastructure development and the country's rapidly urbanizing population, factors such as increased investment in infrastructure projects, rising demand for residential and commercial spaces, and many more are expected to drive the demand for structural steel pipes. The industry's adoption of advanced manufacturing techniques and the introduction of innovative products, such as high-strength and corrosion-resistant pipes, will become the primary reason for the growth in Value Added Products (VAP), hence increasing the mix of VAP in total volume sold. Furthermore, the adoption of better technology will lead to an array of opportunities, leading to an increase in the size of the Total Addressable Market (TAM).

Currently, leaders are concentrating on broadening the product portfolio. Strategic initiatives will assist them in catering to customers' needs as a one-stop solution, meeting the rising demand, reducing costs, and ensuring that the product is available across all regions of India.

Additional demand will be met by Hot Rolled (HR) Coil based steel pipes In India, the anticipated expansion in HR steel production capacity and the consequent increase in structural steel tube manufacturing, which relies on HR coils as its primary input, it is projected that the growing demand for structural steel tubes will be predominantly met by those produced from HR coils. Industry forecasts indicate that an additional 15 Mn T of HR steel production capacity is expected to become operational within the next 3-5 years (as of FY23, HR Coil/strip production in India was ~46 Mn T).

Mode of Financing:

The Cost of this expansion is being met from unsecured loan/internal accruals.

Investment Required:

The total investment required for the above expansion would be approximately Rs. 10 Cr.

Source : Equity Bulls

Keywords

RamaSteelTubes CapacityExpansion Anantapur LepakshiTubes