🟢 At a Glance
Pradeep Metals Ltd manufactures forged and machined stainless and alloy steel components used in everything from petrochemicals to aerospace. Despite slow sales growth, it consistently generates >20% ROE and 15% EBITDA margins. With a final dividend of ₹2.50/share, strong FY25 results, and 23% TTM PAT growth, this ₹485 Cr microcap is heating up. But is there enough fire left in the forge?
1. 🔩 Introduction with Hook
In the age of AI chips and electric scooters, there’s a company doing something very 200 B.C. — heating metal and beating it into shape.
Welcome to Pradeep Metals:
- B2B forgings manufacturer 🛠️
- 42 years old 🏗️
- Supplying to petrochemicals, oil & gas, aerospace, defence 💣
- Still managing 22% ROE with zero buzz on Twitter/X 🙃
So why does a steel-forger command 17.8x P/E and trade at 3.5x book?
Let’s hammer it out 🔨
2. 🏭 Business Model – WTF Do They Even Do?
Pradeep Metals is not your average forging company. Here’s why:
- ISO 9001:2015, 14001:2015, 45001:2018 certified
- Marine and NORSOK certified — a big deal in oil & gas
- Exports to USA, Europe, and Asia 🌍
- Makes closed-die forgings in stainless, carbon, and alloy steels
- Supplies semi-finished + finished machined parts
Clients?
→ Petrochemical giants, defence suppliers, nuclear reactors, shipbuilding, and… yes, maybe your airplane’s turbine casing.
It’s low-key Tier 2 industrial backbone stuff — boring, but highly profitable when done at scale and precision.
3. 📈 Financials Overview – Profit, Margins, ROE, Growth
| Metric | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| Revenue | ₹156 Cr | ₹221 Cr | ₹268 Cr | ₹277 Cr | ₹312 Cr |
| PAT | ₹8 Cr | ₹20 Cr | ₹26 Cr | ₹22 Cr | ₹27 Cr |
| OPM | 16% | 16% | 17% | 15% | 15% |
| EPS | ₹4.7 | ₹11.6 | ₹15.2 | ₹12.9 | ₹15.7 |
| ROE | 4.7% | 11.5% | 15.2% | 20% | 21.6% |
📌 Highlights:
- 5Y PAT CAGR = 22%
- Margins stable, even when raw material prices fluctuated
- EPS nearly tripled in 4 years
- Dividend payout ratio = ~16%
This is slow but consistent compounding. Industrial Zen.
4. 💰 Valuation – Is It Cheap, Meh, or Crack?
- CMP: ₹281
- EPS (FY25): ₹15.73
- P/E: 17.8x
- BV: ₹79.4 → P/B = 3.53
- Dividend: ₹2.50 → Yield = 0.89%
Let’s build a range using FY26 EPS estimate ₹18 (14% YoY growth) and 16–22x P/E:
🔎 Fair Value Range = ₹288 to ₹396
At ₹281, it’s fairly priced, slightly undervalued if FY26 delivers.
5. 🔥 What’s Cooking – News, Triggers, Drama
- ✅ FY25 net profit up 23% YoY
- 🎁 Final dividend: ₹2.50/share (better than many larger peers!)
- 📉 Q1FY24 and Q2FY24 were soft, but Q4FY25 bounced back with ₹7.09 Cr PAT
- 🛠️ Continued capex — plant value up to ₹100 Cr
- 🤐 No stock split or bonus hype… yet
This is a quiet compounder with no flashy announcements, just clean execution.
6. 🧾 Balance Sheet – How Much Debt, How Many Dreams?
| Metric | FY25 |
|---|---|
| Equity | ₹17 Cr |
| Reserves | ₹120 Cr |
| Borrowings | ₹71 Cr |
| D/E | ~0.55 ✅ |
| Total Assets | ₹267 Cr |
| Capex | ₹100 Cr in gross block |
| Working Capital Days | 115 ❌ |
Reasonably geared, but could do better on debtor/inventory cycles. Nothing alarming.
7. 💸 Cash Flow – Sab Number Game Hai
| FY | CFO | CFI | CFF | Net Cash |
|---|---|---|---|---|
| FY23 | ₹37 Cr | -₹19 Cr | -₹20 Cr | -₹2 Cr |
| FY24 | ₹32 Cr | -₹18 Cr | -₹10 Cr | ₹3 Cr |
| FY25 | ₹33 Cr | -₹19 Cr | -₹14 Cr | ₹0 Cr |
👍 Steady cash generation
👎 Capex still eating free cash
But hey, no equity dilution, no toxic debt — a clean operator.
8. 📊 Ratios – Sexy or Stressy?
| Metric | FY25 |
|---|---|
| ROE | 21.6% ✅ |
| ROCE | 21.6% ✅ |
| OPM | 15% ✅ |
| EPS | ₹15.73 ✅ |
| P/E | 17.8x ✅ |
| Debt/Equity | 0.55 ✅ |
| Dividend Payout | 16% ✅ |
Can’t complain. These are Blue-collar Bluechip stats in SME clothes.
9. 💥 P&L Breakdown – Show Me the Money
| FY25 | ₹ Cr |
|---|---|
| Sales | ₹312 |
| Operating Profit | ₹47 |
| PAT | ₹27 |
| EPS | ₹15.73 |
| Dividend | ₹2.50 |
Growth isn’t flashy. But margin + return consistency = big bonus in a capex-heavy business like this.
10. 🥊 Peer Comparison – Who Else in the Game?
| Company | P/E | ROCE | ROE | OPM |
|---|---|---|---|---|
| Pradeep Metals | 17.8 | 21.6% | 21.6% | 15% |
| Bharat Forge | 60.9 | 13.1% | 12.3% | 17.8% |
| Schaeffler | 61.0 | 25.7% | 19.2% | 18.4% |
| Uno Minda | 66.1 | 18.9% | 17.5% | 11.2% |
You’re getting similar returns at 1/3rd the valuation.
This is deep value within the auto-forging mafia.
11. 🧠 Miscellaneous – Shareholding, Promoters
| Category | % |
|---|---|
| Promoters | 73.48% ✅ |
| DIIs | 0% ❌ |
| FIIs | 0% ❌ |
| Public | 26.52% |
Clean shareholding. No pledging. No panic exits. No dilution games. Just boring compounding.
12. 🧠 EduInvesting Verdict™
Pradeep Metals is what happens when a company does its job quietly for 4 decades.
✅ Clean financials
✅ High ROE, ROCE
✅ Low float = high squeeze potential
✅ Global certifications = export moat
❌ Slower revenue growth
❌ No institutional eyes yet
🎯 Fair Value Range: ₹288 – ₹396
CMP ₹281 = fair zone. Any 15–20% dip might be juicy.
This ain’t your multibagger momo play — but if you like patient powerlifting, PML is a forged diamond.
✍️ Written by Prashant | 📅 July 2, 2025
Tags: Pradeep Metals, Forging Stocks, High ROE Smallcap, Auto Ancillaries, Capex Stocks, SME Exporters, EduInvesting, Hidden Gems India, Dividend Stocks
