“BUY” this small-cap industrial stock for around 109% rise: Monarch Networth (MNCL)


The brokerage’s perspective on IFGL refractories

According to the brokerage’s research report, “IFGL is expected to generate strong profit growth with consolidated EBITDA that will double to Rs 1.9-2 billion (in fiscal year 23E / FY24E) against a range from 0.9 to 1 billion rupees in the last 3 to 4 years. adding customers, especially mini factories (10-11% of revenue now vs. no presence before), recruiting industry veterans from peers to key positions, market share in domestic refractory business and a favorable demand scenario from both domestic and global steel industry. We anticipate an improvement in the performance of IFGL’s overseas subsidiaries on the recovery of demand in the EU and the United States as well as greater acceptability of the products sold by Hoffman. Additionally, the benefits of the new plant’s location in the south and the product additions (prefabricated in Vizag) should help IFGL achieve revenue growth of at least 12% CAGR on FY21-FY24E. “

The brokerage also said that “IFGL has maintained net cash for the past 3 years, thus funding expansions through internal provisions while also ensuring higher returns to shareholders (full year dividend yield 21 by 5.8%). IFGL’s cash flow generation is also very efficient due to the tight working capital cycle leading to OCF / Cash PAT> 1 over the past 5 years. Despite such compelling financial data, IFGL is currently trading at 4.1x FY23E EV / EBITDA versus 14-17x for its peers. We believe the stock certainly qualifies for a reassessment. Evaluation.”

Buy IFGL refractories with a target price of Rs. 585

Buy IFGL refractories with a target price of Rs. 585

The brokerage said in its research report that “We launched IFGL Refractories Ltd. (IFGL), a very undervalued company in the booming refractory industry, with a TP of Rs585 (~ 109% at the increase) and BUY. We value the foreign business subsidiary at 4.2x EV / EBITDA Sept’23E, which represents a 40% discount compared to its global peers and domestic activities at 10.2x EV / EBITDA Sep’23E, which is a 40% discount from its domestic peers to arrive at the fair value of Rs585 / share. At a WAC of Rs292, the share is trading at 3.9x FY23E EV / EBITDA. risks: RM cost risk impacted by sea freight inflation, change of direction. ”

Disclaimer

Disclaimer

The stock was featured in the Monarch Networth Capital Limited (MNCL) brokerage report. Investing in stocks presents a risk of financial loss. Investors should therefore exercise caution. Greynium Information Technologies, the author and the brokerage are not responsible for any losses caused as a result of decisions based on the article.


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