RAPICUT CARBIDES LTD - SMALL,BUT STEADY GROWTH

During  1970’s and 80’s Indian Cutting tools industry was dominated by two multinational big daddies – Sandvik Asia and Widia India .In 1977 few technocrats resigned from Sandvik Asia and started this company . Rapicut’s manufacturing facility is located at Ankleshwar,Gujarat.Later company took over  Gujarat Drillwell Private Limited and merged the same with Rapicut in 1993.Company producing  various types of Tungsten Carbide products like . T.C. Buttons, Rings, Tips, Inserts, Flats, Bushes, Jute Eyelets, Solid Carbide Cutters,Tungsten Metal powder ..etc which finds applications in Mining,Metal Cutting and Engineering Industries. Company’s client list includes Neyveli Lignite Corporation,Mineral Exploration Corporation Limited , Steel Authority of India Limited ,Tata Iron & Steel Co. Limited ,BHEL ..etc .This small company showing steady growth over past many years .In latest quarter company reported good numbers .This time it is more important to note that this performance came at a time there is severe slow down in its user industries.I believe company now started to eat the market share of some biggies too.Rapicut is now expanding its manufacturing capacities and ready to  move to the next growth orbit . For the past few months  promoters are purchasing shares from open market  which is another point to note.Company is managed by a decent management which  showing their willingness to share the success with minority share holders. This small company raised their dividend payout ratio from 10 % to 30 %  during last four years.For the last FY,company reported a sale of Rs.30 Cr , net profit of Rs.3 Cr and an EPS of Rs.14/-. In the first six months of this FY itself Rapicut posted a turnover of  about Rs.20 Cr and a net profit of 2.15 Cr .Half year EPS is Rs.10/-. Company is expected to perform even better going forward  with some revival in demand from user industries and stability in raw material price.Due to purchases by promoters and good performance in second quarter ,its share price appreciated recently and trading around Rs.86/- .This company having a tiny equity base of just Rs.2.15 Cr  hence liquidity is low.Those with high risk appetite can add small lots at CMP and buy more if there is any dip below  Rs.75/-. Steady growth ,good management,resilience during tough business environment ,decent dividend yield ,possible capacity expansion and increasing promoter confidence ..etc makes it an attractive micro cap stock, but only for brave hearts due to low liquidity.CMP is Rs.86/-

Link to Company website HERE 

Link to latest Annual Report HERE

Discl: I am holding shares of Rapicut Carbides.