At a Glance
Abha Power & Steel Ltd (NSE: ABHAPOWER) may sound like it supplies electricity, but it’s actually an iron & steel casting manufacturer with clients like Indian Railways. With a 15%+ operating margin, ROE of 18%, and PE under 10, it’s one of those rare SME stocks that looks cheap and clean.
1. 🎯 Introduction – Why Even Look at This?
- ₹31 stock, trading at just 9.25x PE and 1.1x book value
- FY25 PAT: ₹6.23 Cr on ₹70 Cr revenue
- ROE/ROCE both above 18%
- 🧾 Certified vendor to Indian Railways (RDSO approved)
- 📈 Margins jumped from 3% → 15% in just 2 years
In a market filled with lace-to-diamond IPOs and 700x PEs, Abha Power looks suspiciously… grounded.
2. ⚙️ WTF Do They Even Do?
- 🔩 Manufacturer of steel castings and components
- 🧱 Supplies to:
- Railways
- Cement
- Mining
- Power equipment makers
- Heavy engineering units
- 🧪 Works with:
- Mild steel
- Manganese steel
- S.G. iron
- Stainless steel
- High-alloy castings
They’re the people behind the big, heavy, industrial parts that make the world work.
3. 📊 Financials – Surprisingly Strong?
| Metric | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|
| Revenue (₹ Cr) | 54.5 | 54.7 | 51.8 | 70.2 |
| Net Profit (₹ Cr) | -0.72 | 1.40 | 3.78 | 6.23 |
| OPM (%) | 3.0% | 6.1% | 15.7% | 15.3% |
| ROE (%) | – | 29%* | 18% | 18.2% |
| EPS (₹) | -16.3 | 29.1* | 2.62 | 3.35 |
🧠 *FY23 EPS was inflated due to smaller share base pre-IPO
Profit has grown 4.4x in 2 years. Operating leverage is real.
4. 💸 Valuation – Is It Cheap, Meh, or Crack?
| Metric | Value |
|---|---|
| CMP | ₹31 |
| Market Cap | ₹57.6 Cr |
| PE | 9.25x |
| P/B | 1.13x |
| EV/EBITDA | ~6.5x (approx) |
| Fair Value (EduRange™) | ₹40 – ₹48 |
Undervalued across every metric. PE of 9 on 18% ROE = classic value investing alert.
5. 🍿 What’s Cooking – News, IPO, and Action
- 🏭 ₹70 Cr topline in FY25, 36% YoY growth
- 📈 FY25 EBITDA margin at 15.3%
- 🧾 RDSO & PED certification → can supply to Indian Railways and export to EU
- 💸 Recent IPO → ₹26.8 Cr raised, fully utilized with no deviation
- 👋 Independent Director resigned in March 2025 – reason: “personal”
No drama, no frauds, no pledging. Just a boring foundry trying to scale.
6. 🏦 Balance Sheet – Clean Sheet or Dirty Laundry?
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| Equity Capital | ₹4.8 Cr | ₹14.4 Cr | ₹18.6 Cr |
| Net Worth | ₹13.8 Cr | ₹17.5 Cr | ₹50.8 Cr |
| Total Debt | ₹23.9 Cr | ₹23.7 Cr | ₹21.1 Cr |
| D/E Ratio | ~1.3x (FY23) → 0.4x (FY25) ✅ | ||
| Fixed Assets + CWIP | ₹18.9 Cr | ₹18.8 Cr | ₹25.3 Cr |
IPO proceeds went into plant upgrades + WC, not random acquisitions. Clean usage.
7. 💵 Cash Flow – Sab Number Game Hai
| Year | CFO (₹ Cr) | Capex | FCF |
|---|---|---|---|
| FY25 | ₹2.6 Cr | ₹10.1 Cr | -₹7.5 Cr |
| FY24 | ₹4.7 Cr | ₹0.27 Cr | +₹4.4 Cr |
| FY23 | ₹7.9 Cr | ₹13.6 Cr | -₹5.7 Cr |
FY25 FCF was negative due to CWIP ramp-up — not unusual. Cash on hand up ₹15 Cr post-IPO.
8. 📐 Ratios – Sexy or Stressy?
| Ratio | FY25 |
|---|---|
| ROE | 18.2% |
| ROCE | 18.3% |
| OPM | 15.3% |
| Debtor Days | 53 |
| Inventory Days | 219 |
| CCC | 255 days ❗ |
| Promoter Holding | 72.35% |
Only real negative = working capital cycle still long. But receivables are stable.
9. 💰 P&L Breakdown – Show Me the Money
- Sales: ₹70.2 Cr
- EBITDA: ₹10.7 Cr
- PAT: ₹6.23 Cr
- EPS: ₹3.35 (TTM basis)
- No other income gimmicks
- No dividend declared yet
This is a manufacturing-driven profit story, not financial engineering.
10. 🧢 Peer Comparison – Who Else is in the Foundry?
| Company | PE | ROE | OPM | MCap (₹ Cr) |
|---|---|---|---|---|
| AIA Engg | 29.9x | 15.6% | 26.8% | 31,667 |
| Steelcast | 33.1x | 24.2% | 28.2% | 2,389 |
| Synergy Green | 48x | 21.9% | 14.4% | 810 |
| Abha Power | 9.2x | 18.2% | 15.3% | 58 |
No doubt – Abha Power is cheapest by far, despite similar margin and ROE.
11. 🧾 Miscellaneous – IPO, Shareholding, Cleanliness
- 🎯 IPO: ₹26.8 Cr, successfully deployed
- 📈 Promoters: 72.35%
- 👨⚖️ FII: 0.15% entered in FY25
- 👨👩👧 Public: ~2,000 shareholders
- 🚫 No pledging
- 📜 PED & RDSO certs = process-driven culture
Would love to see more investor outreach, segmental detail, or concall culture.
12. 🧑⚖️ EduInvesting Verdict™
“It may not be glamorous, but it melts metal and mints money.”
✅ Clean balance sheet
✅ Undervalued (by a lot)
✅ Good ROE/ROCE
✅ No scams, pledges, or shady warrants
⚠️ Working capital cycle could improve
⚠️ Needs to scale from ₹70 Cr to ₹100+ Cr for rerating
Fair Value Range: ₹40 – ₹48
You don’t often find profitable manufacturing SMEs trading under 10x PE. If they continue 20% CAGR, this could be a slow compounding dark horse.
✍️ Written by Prashant | 📅 July 8, 2025
Tags: Abha Power, Steelcast SME, Iron Foundry Stocks, Indian Railways Suppliers, NSE SME Stocks, RDSO Certification, Powerless But Profitable, EduInvesting, Value Investing India, Smallcap Castings
