IFGL REFRACTORIES LTD- IMPROVING BUSINESS .........

At a time ,one of my old recommendations -Vesuvius India (Recommendation Link HERE) - recorded its 52 week high price ,recommending another stock from the same sector. IFGL refractories is the flagship company of SK Bajoria group.Company manufacturing Continuous Casting Refractories and Special grade Refractories which find applications in steel industry. Refractory ,in general ,means  a class of materials which are produced from nonmetallic minerals and possess capability to withstand heat and pressure .Now IFGL has grown as  an Indian multinational with  manufacturing facilities located in Brazil, China, Czech Republic, Germany, India, UK and USA. Krosaki HarimaCorporation Japan ,a subsidiary of world’s second largest steel maker NipponSteel Corporation holding about 15 % stake in IFGL.Growing through acquisitions is the strategy of IFGL and it reached the current stage through many acquisitions in the past.In 2005 ,IFGL acquired Monocon group of UK with factories in Brazil,China,USA and UK.In 2006, Goricon Group came to the fold of IFGL .In 2008 ,IFGL acquired Hofmann Ceramic GMBH of Germany with manufacturing facilities in Germany ,USA and Czech Republic.In 2010 ,Ohio ( USA) based EL Ceramics LLC added with it .With all these acquisitions company grown as one of the worlds largest manufacturer of refractories.These acquisitions broadened company’s product portfolio which now consist of Isostatic Refractories,Tube Changer Systems,Cast Products and Monolithics,Slide Gate refractories,Slide gate systems and Foundry Ceramics.In addition to these products for steel industry ,IFGL manufacturing Bio Ceramics for dental,orthopedic and ophthalmic applications.

                                                                                  Fate of refractory companies closely related with the growth of steel industry.Now steel industry world around showing some earlier signs of revival.As a global player ,IFGL is expected to  get immense benefit from this revival.Its technical collaboration and equity participation with one of the world leaders also helping the company to adopt latest technology in manufacturing process. A major portion of company’s income is from exports and the currency valuation of currency is also positive for it.

                                                                                 IFGL having a good balance sheet too.Even after these series of acquisitions ,company ‘s debt equity ratio is just 0.55 .For the latest September quarter,on a consolidated basis company reported a Sales of Rs.201 Cr v/s Rs.181 Cr .Net profit improved sharply from Rs.4 Cr to Rs.19 Cr. Half year EPS is Rs.9.70 which is more than the full year figure of last year.Company having an uninterrupted dividend paying record for the past four years.Promoters holding more than 70 % stake( NIL pledged)  in the company  and another 7 % is held by large investors.At a time the steel industry is showing revival ,I expect IFGL will report its best ever performance in this  full year.Even after improvement in its stock price in recent times ,@ CMP Rs.49 ,IFGL is currently trading @ one  year forward P/E of just 3 .Considering industry’s improving prospects,stabilization of production from its newly built plant at  Kandla SEZ and out performance of company in its financials, I don’t expect any scope for deep correction,hence recommending a BUY @ CMP Rs.49 .Stock listed both in NSE and BSE.

Link to Company website HERE

Disc: I have vested interest in IFGL