Hi fellow investor,
( Disclosure: I don't own any shares of Mishra Dhatu Nigam Ltd. Everything I conclude in the article is solely my opinion, based on publicly available information. This should not be taken as financial advice. This is purely for educational purpose.)
Let’s get straight into it.
Midhani was incorporated in November 20, 1973, by the Government of India (GoI), to help India achieve self reliance in the manufacture of a wide spectrum of critical and complex alloys. Midhani is a niche manufacturer, focused on high performance materials for India’s space, nuclear and defence programmes to save them from being hostage to a supplier abroad. Midhani works in close partnership with the Defence Materials Research Laboratory (DMRL), turning laboratory production to industrial scale. In 2018, the GoI divested its stake in Midhani to the extent of 26% through an IPO. Midhani was not setup with profitability in mind, but the company has turned into a “Mini-Ratna” company, and recorded revenues of Rs 8132 mn & PAT of Rs 1663 mn, in FY21.
Midhani produces 3 major products,
High value speciality steel- these are premium alloy steels that can be subjected to high temperatures, stress and corrosive environment. High value speciality steel grades are broadly classified as Nickel alloy, armor grade steel and other speciality stainless steel grades.
Super alloys- these speciality products that have superior resistance towards corrosion and oxidation at high temperature (around 600°C) with extended lifespan in higher stress conditions. They can be classified based on their alloying element into three types- Nickel based, Iron based and Cobalt based.
Titanium Alloys- they are non-magnetic , have excellent corrosion resistance, are light weight, have high tensile strength and toughness even at higher temperatures. Their high strength to low weight ratio, makes them ideal for aircraft manufacturing.
High value speciality steel, Superalloys and titanium alloy products account for less than 1 % of the global steel market. These products are essentially low volume-high value products. In India, these products are mainly supplied by Midhani, who is one of the leading manufacturers of special steels, Superalloys and only manufacturer of titanium alloys in India. Their products mainly cater to aerospace, defence, atomics, space, energy and other industries that require high precision. Aerospace and Defense account for more than 70% of the demand for their products.
Expansion & Modernisation Plans- In 2008, Midhani’s existing Plant and equipments were too old and the company lacked any downstream facilities. The company went on to modernise and expand their operation in multiple phases.