- Wealth PMS
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Graphite India (GIL) manufacturer of Graphite Electrodes [manufacturing capacity of 80,000 tons per annum and used electric arc furnace (“EAF”) based steel mills along with being a consumable item for the steel industry] as well as Carbon and Graphite Specialty products [contributed 91% to FY2016 Sales] .
GIL has 4 manufacturing facilities [proximity to the three main ports of India offers logistic advantages] while the EU market while the foreign operations are looked at by the subsidiary based at Nuremberg, Germany with an Electrode capacity is 18,000 tons per annum.
Graphite India is the largest Indian producer of graphite electrodes by capacity which accounts for 12.6% of the global electrode capacity [other players include GrafTech, SGL Group, Showa Denko, Tokai Carbon and HEG].
Other products manufactured by the company includes Calcined Petroleum Coke [used in electrode manufacturing] & Carbon Electrode Paste, Glass Reinforced Plastic Pipes [used in pipelines for water supply, cooling towers, industrial process, seawater pipelines and gasoline storage] and High Speed Steel [largest producer in India and mostly used in the manufacturing of cutting tools such as drills, taps, milling cutters, reamers, hobs, broaches etc.] & Alloy Tool Steels.
GIL also has a power generation capacity of 33MW through hydel and multi-fuel routes which is basically used as captive supply for the graphite electrodes business.
Graphite trades at a PE ratio of 27 times its 4 quarter trailing earnings. This is expensive given the low / single digit Return on Equity the stock has been seeing for quite a while now.