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Rasi Electrodes


Rasi Electrodes is in the business of manufacturing welding electrodes and trading in copper coated mild steel (CCMS) wires.

The company has a reasonably good brand image in certain of its segments.

The company has reported reasonable growth in revenues over the last five years but the operating profits have remained largely the same.  It reported about 2cr of operating profits on revenues of about 21cr in the last financial year while employing modest financial leverage.

The business is exposed to rising steel and rutile prices.  It also incurs heavy working capital investments resulting in hits to its operating cash flows.  Moreover, it will require heavy capital expenditure in the future as a result of PSU customers requiring it to operate with more of its own manufacturing facilities.  This will result in lower free cash flows, at least over the next few years.

It is a net importer and hence, exposed to a weakening INR.  Moreover, it is still trading CCMS wire and hence, doesn’t fully control this portion of the value chain imparting less confidence in future profit streams from this segment.
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