Prakash Industries Overview
Prakash Industries is a Conglomerate mainly focused on Steel and Power sectors. The company came into existence in year 1980. As per the company website it is operating in below segments as of now.
- Mining – Coal and Iron Ore Mining. Iron Ore mining has not yet commenced and will start after approval from Authorities.
- Steel – The manufacture and sale of Steel Products is the primary business. It creates two types of Steel products Intermediate products (Sponge Iron, Ferro Alloys, Steel Billets) and Finished products (Wire Rods, HB wires, TMT bars, Structural products)
- Power – The company is presently operating a 230 MW captive power plant using Waste Heat Recovery Boilers and Fluidized Bed Boilers.
- Wind Power – Prakash Industries Ltd. has set up Wind Power Generating Farms at Muppandal in the state of Tamilnadu
- Plastics – In this segment company operates in two verticals PVC pipes and Flexible packaging.
The main business of Company is Steel as you can see above. It has used Mining to supplement the Steel business only. The power sector was also used to supplement the Steel work. It generates power from Steel Industry only.
So the company is trying to take hold of raw materials or things which are needed to operate Steel industry. This will help it reduce cost and also make profit from these supplementary ventures.
Now lets see how company has performed over the years on stock exchanges.
Prakash Industries Share Performance
Below graph shows the price performance of Prakash Industries over the period of time. We have taken long time period as reference to eliminate any cyclic impact on prices.
The graph looks interesting is not it. The company was languishing at price of single digit in year 2002. From there it reached all time high of 300 above levels. During 2008 crash the prices went back to 50 odd levels.
After 2009 Company was able to bounce back and go past 200 levels. Sine then it has corrected and remained in ranges. It has not crossed 300 mark it created during initial part of 2008. Though it crossed 200 marks in year 2018.
This is not graph of company which have performed well over the years. It has see saw type of movement. In the entire 15 year graph it has indeed made some investors very wealthy and also destroyed wealth of many as well.
If people have invested at right levels that is below 50 odd levels then they have made money but people investing at top levels have lost money in the counter.
Prakash Industries My Opinion
I personally do not like cyclic sectors or companies which give see saw type of movements. It is tough to buy at right levels and chances are high that you bought at high level and then your price comes after few years.
So timing in this type of counters is very important. Rakesh Jhunjhunwala has learnt the art of timing so he has stake in this company. But for me it is not the case.
There are other companies in this sector namely Tata Steel from Tata Group of Companies. You should explore these companies as well if you are interested in Steel segment.
I would recommend that you browse portfolio of top investors of India. Many have included Steel companies in their portfolio. So you will have more idea about the companies operating in this sector.
Conclusion
As mentioned above looking at the long term cyclic return of the company and sector it is operating in I am not interested in the company. You can explore it more if you are interested.