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Centrum Broking
IFGL Refractories (Buy)
CMP: ₹202.95
Target: ₹320
We recently had a detailed interaction with senior management of IFGL Refractories and key takeaways were i) Revenue growth at an inflection point with consolidated topline growth expected at 15 per cent+ for FY19E led by pricing growth of 5-7 per cent and volume growth of 8-10 per cent); ii) well invested asset base with completion of recent expansions at domestic as well as overseas operations placing IFGL favourably to meet increased demand and gain market share globally; and iii) operating leverage benefits improving the margin profile.
Management also stressed upon their efforts towards scouting for a good acquisition target in refractories space globally. We continue to like IFGL’s operationally sound high-quality global assets and expect solid earnings growth over FY18-20E which could end up being conservative given the strong management guidance. Recent correction has made valuations undemanding and provides a favourable risk-reward for long-term investors. Maintain ‘Buy’ with a target price of ₹320.
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