Target: ₹1,702
CMP: ₹1,658.55
IFB Industries (IFBI) revenue grew 22.3 per cent y-o-y (6.6 per cent higher than estimates). Its home appliances business registered revenue growth of 28.4 per cent, while engineering services registered muted growth of 5.2 per cent. Company’s overall gross margin at 37.5 per cent has contracted 235 bps on a y-o-y basis as company could not achieve desired reduction in material costs.
Muted revenue growth in engineering segment is on back of slowdown in automobiles. Its key category of washers has been facing demand challenges as industry has experienced lower demand in Q4 particularly for front load washers below 10 kg. RAC, on the other hand, continues to witness strong demand. Refrigeration production is ramping up swiftly and company is manufacturing 35,000 units on monthly basis. RAC business continues to do well for the company and robust growth to continue in FY26 as well, moreover RAC business has turned EBITDA positive which company will build on going forward.
Cost reduction in logistics and warehousing is expected to bring down its fixed costs by ₹60 mn on monthly basis. Benefits of the cost reduction will start accruing from Q3FY26 and complete benefits should be visible in FY27. We however will be cautious as company in past has not been able to deliver on margin expectation. We now assign Add rating with PT of ₹1,702.