Ratnaveer Precision Engineering targets CCL-led growth as five-line project nears commissioning

Investment View and Valuation

ICICI Direct Research retains a BUY rating on Ratnaveer Precision Engineering with a fair value of Rs 325, valuing the company at 20 times FY28E EPS. The broker views the planned Copper Clad Laminate (CCL) business as the key medium-term value-creation opportunity, while the existing stainless-steel business remains the earnings base.

CCL Diversification Creates an Import-Substitution Opportunity

Ratnaveer is diversifying from stainless-steel products and precision components into CCL, an electronics-grade material used in printed circuit boards. Its established portfolio includes finished stainless-steel sheets, washers, solar roofing hooks, pipes and tubes.

Management estimates the Indian CCL market at about Rs 5,000 crore, with more than 90 per cent of demand met through imports and monthly demand exceeding 3 lakh sheets. CCL demand serves electric vehicles, 5G, consumer electronics, defence and aerospace, creating an import-substitution opportunity for Ratnaveer.

Management expects the Indian CCL market to reach Rs 29,880 crore by 2031. The Indian PCB market is expected to reach Rs 1.77 lakh crore by 2032, implying a 16.4 per cent CAGR.

Five-Line CCL Project Nears Commissioning

Ratnaveer is developing a five-line facility for FR-4 grade CCL. The project was about 60 per cent complete at the time of the report. Machinery for Line 1 had been ordered and inspected, with shipment and installation under way. Commercial commissioning of Line 1 is targeted for November 2026, while the remaining four lines are expected to be commissioned progressively.

At full scale, the facility is planned to produce 79.2 lakh sheets annually, which management estimates would represent about 1.8 per cent of the Indian CCL market. Phase 1 has approval for Rs 338 crore of investment over three years under the Electronics Component Manufacturing Scheme. The broader project has received in-principle approval for Rs 472.34 crore under the Gujarat Electronics Policy.

Rights Issue and Potential Dilution

The company has approved a Rs 330 crore rights issue of 1.25 crore shares. Assuming full subscription, the equity base would increase from 7.14 crore to 8.39 crore shares, implying 17.5 per cent dilution.

ICICI Direct notes that the deployment of the proceeds into the CCL project and other growth initiatives will be important. The broker will also monitor whether incremental earnings from these investments are sufficient to offset the dilution.

Existing Stainless-Steel Business Remains the Earnings Base

Ratnaveer’s established stainless-steel portfolio provides the current earnings foundation. In FY26, stainless-steel finishing-line sheets contributed about 53 per cent of revenue, followed by washers at about 15 per cent, sheet-metal components at about 11 per cent, scrap sales at about 9 per cent, tubes and pipes at about 6.5 per cent, and nuts and bolts at about 5.5 per cent.

In actual Q1 FY27 results, revenue increased 18.9 per cent year on year, EBITDA rose 19.1 per cent and PAT grew 22.0 per cent. EBITDA margin remained stable at 10.2 per cent. The company operates five integrated manufacturing facilities, uses 90 per cent renewable power and has complete forward and backward integration.

Management’s long-term aspiration is consolidated revenue of about Rs 2,500 crore over the next three to five years, including about Rs 1,800 crore from the existing stainless-steel businesses.

Earnings Outlook

ICICI Direct estimates revenue and PAT CAGR of about 32.7 per cent and 45.8 per cent, respectively, between FY26 and FY28E. The estimates incorporate CCL earnings from FY27E and FY28E.

Key Risks

• A slowdown in industrial capital expenditure could affect demand and growth.
• High working-capital requirements may weigh on cash flows and execution.