Orient Refractories Limited(FV-Rs1) : CMP 87 Excellent levels to grab this MNC availaible at cheap PE multiple of 20

About Company:

The Company provides a wide range of special refractories and monolithics to meet the needs of the iron and steel industry .Austria based RHI AG , holds approx. 70% share in the company and is part of RHI AG group now.

 All the products are custom made to suit the casting conditions and grade of steel being cast and are a result of an intensive research and development effort by the Company. To reinforce quality and development of products, the Company has an in-house Research and Development facility that is recognized by the Government of India.

Customers:

ORL customers include large domestic integrated steel producers and mini steel plants that include Steel Authority of India, Mukund Steel, Tata Iron and Steel Company, RINL – Vizag, Sunflag Iron, Lloyd Steel, Usha Martin and the Jindal Group. With close to 300 small to medium sized iron and steel producing Indian companies as customers, ORL is a preferred vendor for a large number of steel producers in the country.

ORL has significant presence in the global market place with exports to over 35 countries across the globe including Germany, France, Spain, Turkey, Egypt, Indonesia, Saudi Arabia, Thailand, UAE and Greece.

Factory: Company’s factory is located in 27 acre of land in Bhiwadi.

Financial Performance:  In FY 2013-14 company achieved revenue of 403 crores with NP of 52,85 crores resulted in EPS of 4.4 for the year. Company has been consistently delivering increasing profit in last 3 year with increase in EPS from 2.8 to 4.4 in 2 years. Interestingly company has been delivering good results in last 3 years which are considered recession years.

Positives:

1.       Strong MNC promoters

2.       Debt Free Company

3.       Niche products

4.       Increasing profit margins

5.       Consistent Dividend payment record

6.       With expected improvement in GDP in next 2-3 years company should improve the performance due to increase in demand of steel and cement which are major sectors. 

Stock is available at cheap PE  multiple of 20 currently most of good MNC companies are enjoying PE multiple of 25-75 so in comparison stock is cheaper with improvement in financial performance going forward this stock can deliver multiple returns in next 2-3 years.

 

Strong buy at current levels for long term investors One year target 150 ,2 year target 200+