Rohit Ferro Tech Ltd: Buy

CMP: Rs.8.30 

Buy Rohit Ferro Tech Ltd at Rs.8.30, for a short term target of Rs.12-13.5.  The Company was brought under the Corporate Debt Restructuring (CDR) Scheme for nursing it to profitability. The management has adopted focused and aggressive business strategies and functions to improve the sales and profitability of the Company. Considering the present sign of improvement in overall business environment, the Company is expecting an increase in its revenue and profitability. 

The Management is confident of higher growth in the period to come.  Decrease in the administered price fuel and the gradual streamlining of the coal sector is expected to help the company shore up its bottomline. 

Moreover, the basic engineering and civil and structural work of Captive Power Plant of 67.5 MW & 33 MVA Furnace is completed. Due to delay in delivery of the some major equipment’s having long lead time the project is not completed in its schedule time. The Company expects to commence the commercial operation of the said projects by the end of March, 2015.  Hence, we have around 2-months time.

Also, the company will allot, subject to the approval of the shareholders, 7,12,05,000 (Seven Crores Twelve Lacs Five Thousand) Convertible Warrants of nominal value of Rs 10 each at a price of Rs. 20 per Warrant (including a premium of Rs.10 per Warrant) in accordance with SEBI (ICDR) Regulations, 2009, to the entities belonging to the promoter group and strategic investors belonging to non-promoter group on preferential basis.

The point is when there is a cut in the interest rates, then rate sensitive sector and its dependent sectors (Steel, Building Materials, Glass, etc) generally does well. Therefore, I would suggest you to stay put in these sectors.