IFGL Refractories: Buy at CMP and add on declines

RETAIL RESEARCH Page | 1
IFGL Refractories (IFGL) Ltd
Scrip Code Industry CMP Recommendation Add on Dips Sequential Targets Time Horizon
IFGREFEQNR Refractories 144.8 Buy at CMP and add on declines 127-134 178-204 2-3 quarters
IFGL is a manufacturer of specialised refractories and operating systems for the steel and iron industry. It manufactures
specialized refractory for flow control of steel and treatment of quality thereof. The Kolkata headquartered company promoted
by S K Bajoria Group now has eight manufacturing plants across the globe (in China, UK, Germany, India and USA).
Triggers
 Large Player in Key Consumable for Steel
 Diversified Presence and products to help the company
 Incremental capacity to drive earnings
 Available at discounted valuations than competitors
Risks/Concerns
 Dependence on raw material imports from China
 Rising prices of the inputs like crude oil, alumina, magnesia
 Any slowdown in the global as well as local economy
 Foreign exchange risks
Conclusion and Recommendation
At the current market price (of Rs 144.8) the company is trading at 7.0x its FY15E consolidated EPS of Rs 20.5 and 5.7x its FY16E
consolidated EPS of Rs 25.5. We value the company at 7.0.x-8.0x its FY16E EPS to arrive at our sequential target price of Rs 178
and RS 204. We feel investors could buy the stock at CMP and add on dips to Rs.127-134 band (5-5.25x FY16E EPS) for the above
target price in 2-3 quarters.
Financial Summary (Consolidated)
Particulars (Rs in Cr) FY11 FY12 FY13 FY14 FY15E FY16E
Total Operating Income 471.0 603.9 671.2 777.6 867.7 1085.3
Operating Profit 42.7 75.2 58.1 109.6 125.0 154.1
OPM (%) 9.1 12.5 8.7 14.1 14.4 14.2
Other Income 4.7 2.6 4.5 3.4 4.0 4.5
Reported Profit After Tax before MI 24.3 39.8 25.4 65.8 73.1 90.1
Reported Profit After Tax after MI 24.3 39.9 28.2 64.0 71.1 88.1
PATM (%) 5.2 6.6 4.2 8.2 8.2 8.1
EPS (Rs.) 7.0 11.5 8.2 18.5 20.5 25.5
(Source: Company, HDFCSec)
RETAIL RESEARCH
STOCK NOTE July 15, 2014
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1-532133.IFGL REFRACT .BSE - 14/07/14 Trend7
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Stock Details
BSE Code 532133
NSE Code IFGLREFRAC
Bloomberg IFGL:IN
Price (Rs) as on 14 July,
2014 144.8
Equity Capital (Rs Cr) 34.6
Face Value (Rs) 10
Eq. Shares O/s (Cr) 3.46
Market Cap (Rs.) 501.0
Book Value (Rs) 90.87
Avg. Volume (52 Week) 17352
52 wk H/L (Rs) 182/23.45
Shareholding Pattern
(As on March, 31 2014)
Promoters 71.30
Institutions 1.05
Non Institutions 27.65
Total 100
Zececa Mehta
Research Analyst
zececa.mehta@hdfcsec.com

Company Profile
IFGL is a manufacturer of specialised refractories and operating systems for the steel and iron industry. It manufactures
specialized refractory for flow control of steel and treatment of quality thereof. The company is also engaged in manufacturing
of foundry ceramic fillers for dentistry, orthopedic and ophthalmic segments. The company has a technical collaboration with
Krosaki Harima Corporation of Japan, a subsidiary of Nippon Steel Corporation. IFGL is specialised in manufacturing slide gate
refractories and continuous casting refractories.
IFGL acquired several facilities internationally to access the new market and technology in the past. The Kolkata headquartered
company promoted by S K Bajoria Group now has eight manufacturing plants across the globe (in China, UK, Germany, India and
USA) and is present in more than 50% of the global markets and has a distribution and service network over 50 countries. In
India, the company has facilities in Rourkela, in Odisa, and Kandla, in Gujarat.
It has a 100% holding in its three subsidiaries Monocon Group, Hofmann Ceramic and EI Ceramics, while it has set up IFGL
Exports (51% stake by IFGL) with a technical collaboration with Krosaki Harima, Japan, which is into manufacturing of continuous
casting refractories at Kandla Special Economic Zone, Gujarat. IFGL has long term relationships with large steel companies, like
Tata Steel Europe, Essar Steel, JSPL, SAIL etc.

Acquisitions
In 2005, IFGL acquired the UK-based Monocon Holdings Ltd and its subsidiaries in the US, UK, China, Brazil (Monotec) and
Taiwan. While the Taiwanese unit was closed down in 2007-08 and Brazil unit was shut down in Jan 2013, the other four (2 in
China, 1 in UK and 1 in USA) are in operation.
In July, 2008 Hoffman Group with manufacturing facilities in Germany and Czech Republic for products like Foundry Ceramics –
Casting Filters, Feeders, SiC Chill Plates, Pouring System and Monoblock Stopper, High Grade fire proof refractory shapes and
Drawing tools and Tread Guides was acquired. Currently the company has one manufacturing facility in Germany.
In September, 2010 IFGL acquired EI Ceramics LLC and CUSC International Limited (CUSC), both Cincinnati, Ohio based
companies engaged in manufacture of Isostatically Pressed Continuous Casting Refractories. CUSC was a kind of an ancilliary unit
which provided services like raw material, warehousing, packaging, etc to EI Ceramics and now it has been merged into EI
Ceramics which is the other plant of IFGL which is operational in USA.
The main vision of the company for these acquisitions was to bring along new products and technologies, venture into new
markets and increase its customer base by tapping the new customers.
Industry
Refractories
Refractories are those materials which can sustain high temperature without degrading or softening. The size of the Indian
refractory industry has been pegged at Rs 2,300-2,500 crore (that of the world is pegged at $1 billion) and is stated to be
growing at 8-10 per cent per annum. Refractories are consumed by the iron and steel, nonferrous, cement, copper, glass,
aluminum, fertilizer, thermal power plants and petro-chemical industries etc., which are witnessing robust growth. The fortunes
of the refractory industry are considerably linked to the growth of iron and steel sector, which consumes a massive 75% of the
refractories produced. This is followed by the cement industry consuming about 12%, non-ferrous industry consuming about 5-
6%, glass industry consuming about 3% and balance in other industries.
India accounts for around 4% of the total refractory production. Asia account for 30% of the total production whereas China is a
biggest consumer of refractories due to increasing steel production. However, China is able to suffice its domestic demand due
to availability of raw materials and is not dependent on the imports. In China, due to the easy availability of critical raw
materials, prices of refractories there are at a big discount over what they cost in India (that is why many companies are setting
up their refractories manufacturing facilities in China). Though there is a cost advantage in China, India has a long tradition of
making refractories in many types and shapes. Also India is doing a good job as a total refractory solutions provider. This is an
area where many Chinese suppliers are found wanting.

Steel
India has become the second best in terms of growth amongst the top ten steel producing countries in the world and a net
exporter of steel during 2013–14. Steel production in India recorded a growth rate of 4.8 per cent in February 2014 over
February 2013. The total market value of the Indian steel sector stood at US$ 57.8 billion in 2011 and is expected to touch US$
95.3 billion by 2016. The infrastructure sector is India’s largest steel consumer, thereby attracting investments from several
global players. Owing to this connection with core infrastructure segments of the economy, the steel industry is of high priority
right now.
India needs investment of US$ 210 billion over the next decade to achieve the steel production capacity of 300 million tonnes
per annum (MTPA) by 2025 from the current 90 MT. Also with the expansion of capacities by SAIL, Vizag Steel, JSPL, etc the
capacity of the Indian Steel industry would expand further by 40 MT in the next 3-4 years time frame.
The future of the Indian steel industry is bright. The government plans to increase infrastructure spending from the current 5 %
GDP to 10 % by 2017, and the country is committed to investing US$ 1 trillion in infrastructure during the 12th Five-Year plan.
Shareholding pattern
Particulars (%) Mar-14 Dec-13 Sep-13 Jun-13 Mar-13
Indian Promoters 56.83 56.83 56.83 56.83 56.83
Foreign JV Partners 14.47 14.47 14.47 14.47 14.47
FIIs 0.00 0.00 0.00 0.00 0.00
Mutual Funds 0.03 1.19 1.20 1.20 1.20
FIs/Banks 1.02 1.02 1.02 1.02 1.02
Corporate 9.15 8.61 7.60 7.46 7.36
Public & Others 18.50 17.88 18.88 19.02 19.12
Totals 100.0 100.0 100.0 100.0 100.0
(Source: Company, HDFCSec)
Triggers
Large Player in Key Consumable for Steel:
IFGL is into the manufacture of Refractories. Refractory is a term given to a class of materials which are produced from non-
metallic minerals and possess capability to withstand heat and pressure. These are products that confer properties like high
temperature insulation, resistance to corrosive and erosive action of hot gases, liquids and solids at high temperatures in various
kilns, furnaces, driers, gasifiers and reformers. Refractories act as the key consumables for the steel industry. Since the steel
industry has been seeing a constant growth over the last few years and continues to be growing further there is a continuous
flow of demand for IFGL’s products.
A couple of years back, the global slowdown had impacted the performance of all sectors worldwide and steel was not an
exception. In FY09, the performance of IFGL was impacted to the slowdown across the globe and its margins were hit. However,
now, the steel industry in developed economies likes the US and Europe seems to be coming out of woods and the management

expects the same trend to get reflected in the domestic markets as well along with a renewed focus of the new business friendly
government.
Diversified Presence and products to help the company:
IFGL has highly efficient facilities located in India, UK, US, China, and Germany giving it a strategic presence. This acts as one of
the major advantages for the company as it is able to cater to customers in different parts of the world from their varied
locations and also is able to tap a wider range of countries because of its strong presence in these countries. In India, IFGL has
locational advantage from the plant in Odisha as major steel players like SAIL, Tata Steel, RINL, Essar Steel, Bhushan Steel, JSPL,
JSW Steel, Ispat, Mittal and POSCO have their plants located in close proximity to the IFGL plant. SAIL, Vizag Steel, Jindal Steel
and Power are some of the major customers of IFGL, including Arcelor-Mittal.
The logistics cost is one of the major cost for these companies, so to have plants set up in areas where the demand is there,
would save a lot of cost for the company.
Incremental capacity to drive earnings
Out of IFGL’s subsidiaries, there is an expansion plan in two manufacturing units. IFGL is going to double the capacities of two of
its facilities in Kandla, Gujarat (in Phase 1 and Phase 2) and Ohio, USA in the next one-year period. Both these facilities
manufacture isostatically pressed continuous casting refractories (for which the technology will be used of its Japanese JV
partner). With this capacity augmentation plan, the capacity of the Kandla plant will go up from 72,000 pieces per annum to
144,000 pieces per annum by the end of FY2015 (Phase 1). It is doubling its capacity of the US facility too which currently has a
capacity to manufacture 80,000 pieces per annum and which is expected to commence from Q1FY2016. This expansion will cost
about $1.5-2.0 million and would be funded through internal accruals. We expect both the incremental capacities to potentially
add revenues of around Rs 150-200 crore after expansion and full utilisation and the Kandla facility could earn a better margin.
For Phase 2 of the Kandla plant expansion, the capacity would be further expanded by 80,000 pieces per annum but the cost of
this expansion would be around $2.5-3 million. The increase in the expansion cost, viz a viz the cost of Phase 1 is high, as the
company feels that they may need different kind of equipments as more than just debottle-necking is required in this phase.
Final decision on Phase 2 expansion will be taken in FY16.
Spare capacity also to drive in revenues:
Apart from the expansion at Kandla and Ohio, the company does have some spare capacity at the Rourkela plant (India) and
plants at China, UK and Germany. This spare capacity can give IFGL 25-30% rise in its revenues going forward, without any
capacity expansion.
Expansion won’t hamper financial ratios:
The capital expenditure (capex) required for the incremental capacity is not significant (Rs15-20 crore) being a brown field
expansion at the existing facilities of Gujarat and USA. Considering a debt repayment scheduled ahead, the debt of the company

is likely to remain largely the same. Therefore, we believe the ongoing expansion would drive the earnings growth and improve
the return ratios in the future.
Strong financials delivery and optimistic management commentary:
IFGL exhibited a very strong result (on a consolidated basis) in FY2014 with a rise of 16% YoY in the topline at Rs 777.6 crore and
by more than a doubling of its net profit (127% up YoY) to Rs64 crore. This was backed by a significant margin expansion of 544
basis points YoY to arrive at the OPM of 14.1%, owing to a lower raw material cost. Also, at the standalone level, interest cost
has reduced substantially by 43% to Rs 2.3 crore in FY14 as compared to Rs 4.1 crore in FY13.
For FY14, the company’s overseas subsidiaries did well, particularly the ones in UK and USA to register an increase in income of
Rs 69 crore to register a revenue of Rs 444.46 crore (up by 18% YoY), an increase in PBT of Rs 29 crore to reach to Rs 50.76 crore
(up by 133% YoY) and an increase in PAT by Rs 24 crore to Rs 38.26 crore (up by 168% YoY). Also, IFGL Exports Ltd (Indian
subsidiary at Kandla) performed satisfactorily with income growing by 244% YoY (for 11 months in FY13 as Kandla operation
started in May 2012) to Rs 31 crore and to record a PBT of Rs 3.5 crore against a loss of Rs 5.73 crore in FY13 (11 months)
During the post-Q4FY14 result conference call, the company’s management sounded confident to sustain such a margin level
going forward. The management aims to sustain the margin at around 14%. Further, the management shared that they had
managed to gain market share during FY2014 and expects the domestic revenues to improve, as the overall market is expected
to expand with the commissioning of the steel capacities by major players like Jindal Steel and Power Ltd (JSPL) and Steel
Authority of India Ltd (SAIL).
Out of the core management team of IFGL, since Oct 2009, Mr. Gian Carlo as been associated with the company. He was a
former president and CEO of Vesuvius (now Vesuvius plc.) and was instrumental in steering Vesuvius from US$ 100 million
company to over US$ 1 billion company. This further gives us confidence that IFGL can keep growing in the coming years.
Healthy cash generation and return ratios, trend augurs well:
IFGL managed to generate a free cash of Rs30 crore due to the timely repayment of debt in FY14 and we expect the trend to
continue in FY15 and FY16, given the minimal capex plan lined up. Hence, we expect the balance sheet to strengthen as the
debt-equity ratio is likely to come down in the future from the current 0.3x. The return on net worth (RoNW) was around 15-
20% in the past, except in the case of FY2013, which in our view is likely to remain firm.
Available at discounted valuations than competitors:
Companies
FY13
Total
Revenue
(Rs in Cr)
PAT
(Rs in Cr)
EPS
(Rs)
CMP as
on
140714
(Rs)
PE P/BV EV/EBITDA Debt/Equity Mkt
Cap/Sales
IFGL Refractories 671.2 28.2 8.2 144.0 4.2 0.5 3.6 0.2 0.2

Vesuvius India* 601.8 65.2 31.3 678.0 14.2 2.3 7.0 0.0 1.4
Orient Refractories 359.9 41.4 3.3 88.0 11.2 1.7 7.0 0.0 1.2
*December ending company (Source: Capitaline)
For IFGL, the direct competitors are as given above in the table. Vesuvius India Limited is a subsidiary of Vesuvius Group Limited;
U.K. the company manufactures Continuous Casting Refractories including slide gate equipments and porous plugs, monolithics,
pre-cast shapes, taphole clay and crucibles for non-ferrous industry.
RHI AG (an Austria based company is a globally operating supplier of high-grade refractory products, systems and services)
during March 2013 acquired 69.6% stake in Orient Refractories Ltd for a value of € 50 million. RHI paid consideration (of ~ Rs 350
cr) valuing the acquiree at ~13 times its 9MFY13 PAT and ~1.7x Mcap to sales. Currently IFGL is available at 7.8x P/E and 0.6x
Mcap to sales.
Both the above companies have the backing of a global parent and thus have updated technology. As far as IFGL is concerned,
the company formed a technical and financial joint venture with Krosaki Harima Corp. of Japan which is a subsidiary if Nippon
Steel Corp., Japan. This company is also specialized in continuous casting refractories and hence their technology can be used by
the company. The Kandla plant is also being expanded in this same type of refractories.
Vesuvius India is the market leader in the refractory industry so a premium valuation is justified. But, IFGL is trading at a
significant discount than both, Vesuvius and Orient Refractories even though its financials are as strong as the peers. The MNC
nametag and the difference in technology prowess do not warrant such a large difference in valuation. As per FY13, its P/BV is at
just 0.5x which is far lower than 2.3x and 1.7x that of Vesuvius and Orient respectively. Even in EV/EBITDA terms, IFGL is just at
3.6 times than 7 times of both the peers.
Partnership with Nippon Steel Group for Technology backed by its own R&D:
IFGL Refractories has a partnership with Krosaki Harima Corporation which is a subsidiary of Nippon Steel Group for Technology,
Japan. This enables the company to command a stronger foothold in the industry in terms of superior technology when
compared to other local peers. Global giants like Vesuvius and the recent acquirer, RHI AG group, have similar strong
technologies. This shows the capability of IFGL to produce competitive technologically superior products and have a strong
market share across segments. Technologies imported from time to time have been successfully absorbed. Changes were made,
wherever necessary, in imported technologies with consent of the collaborators to suit Indian conditions in IFGL’s own R&D.
Technology enhancement in Steel industry, beneficial for IFGL:
In Industries like steel with better technology used for production, the consumption of refractories is going down. Initially where
to make 1 tonne of steel, 30 kg of refractory was used but now it’s down to about 12 kg. In some new generation steel mills, the
consumption is just about 7-8 kg of refractory. This however is advantageous for IFGL as it makes specialized refractories and
can cater to such requirements. So if a steel manufacturing unit which is using advanced technology, it would need specialized
refractories which are costly. This will help IFGL to earn better margins due to a better realization commanded by these high

tech refractories. Impact on demand in terms of volumes is also not expected to be large in the back ground of steel capacity
expansion plans.
Diversifying into Bio Ceramic Production:
IFGL has diversified its business into Bio Ceramics. Ceramics used for the repair and reconstruction of diseased or damaged parts
of the musculo-skeletal system, are termed as bio ceramics. Applications include replacements for hips, knees, teeth, tendons
and ligaments and repair for periodontal disease, maxillofacial reconstruction, augmentation and stabilization of jaw bone,
spinal fusion and bone repair after tumor surgery. This is a relatively new and different segment of business which the company
has pursued for last 2-3 years. As this is a specialized business, it will take some time for it to stabilize.
Risks/Concerns
 The Refractory industry is dependent on raw material imports from China which are critical for manufacturing of
refractories. This results in high cost of production as compared to China where the raw material is readily available. For
this reason many refractory players, including IFGL, have set their shops in China due to easy availability of critical raw
materials at prices bearing a big discount over what they cost in India.
 In the event of continued high prices for crude oil and other petroleum products and hardening of the coal prices, the
prices of the inputs of the refractory industry are increasing. Though the company takes price increases, it comes into
effect with a lag of 1-2 months.
 The business can be affected by the slowdown in the global as well as local economy. The company had faced some
trouble during 2009 when the global economy was in slumps.
 As India sales contribute to just about 20% to the consolidated revenues of IFGL; there is a risk of currency fluctuations.
Strengthening of the rupee and/or euro can hit its revenues and affect the topline and bottomline as the company does
not hedge.
Conclusion and Recommendation
IFGL Refractories is small (in comparison with its peers) but a growing company. Given the expansion at plants without any
significant capex, backing of technological support of the Japanese partner, diversification in products offered and the markets
tapped in, improving global economy and the emphasis on infrastructure by the new Government along with capacity expansion
plans by some steel manufacturing companies in India, we believe that the company has the potential to grow at a fast pace in
the next two years. Also the discounted valuation as compared to its peers gives us confidence that there could be a re-rating
due for IFGL.
At the current market price (of Rs 144.8) the company is trading at 7.0x its FY15E consolidated EPS of Rs 20.5 and 5.7x its FY16E
consolidated EPS of Rs 25.5. We value the company at 7.0.x-8.0x its FY16E EPS to arrive at our target price of Rs 178 and RS 204.
We feel investors could buy the stock at CMP and add on dips to Rs.127-134 band (5-5.25x FY16E EPS) for the above target price
in 2-3 quarters.

OPM (%) 9.1 12.5 8.7 14.1 14.4 14.2
Other Income 4.7 2.6 4.5 3.4 4.0 4.5
Reported Profit After Tax before MI 24.3 39.8 25.4 65.8 73.1 90.1
Reported Profit After Tax after MI 24.3 39.9 28.2 64.0 71.1 88.1
PATM (%) 5.2 6.6 4.2 8.2 8.2 8.1
EPS (Rs.) 7.0 11.5 8.2 18.5 20.5 25.5
(Source: Company, HDFCSec, E: Estimates)
Financials
Quarterly (Consolidated)
Particulars (Rs cr) Q4FY14 Q4FY13 % chg Q3FY14 % chg FY14 FY13 % chg
Income from Operations 200.3 164.1 22.1% 194.7 2.9% 777.6 671.2 15.9%
Other Operating Income 0.0 0.0 0.0 0.0 0.0
Total Income 200.3 164.1 22.1% 194.7 2.9% 777.6 671.2 15.9%
Consumables and Spares consumed 98.5 84.9 16.0% 97.5 1.0% 377.8 352.3 7.3%
Employee Expenses 28.1 26.4 6.6% 29.4 -4.4% 109.7 98.7 11.2%
Work and Consultancy expenses 0.0 0.0 0.0 0.0 0.0
Other Expenses 45.5 43.9 3.8% 40.7 12.0% 180.5 162.1 11.3%
Total Expenditure 172.1 155.1 10.9% 167.5 2.7% 668.0 613.0 9.0%
Operating Profit 28.2 8.9 216.4% 27.2 3.6% 109.6 58.1 88.6%
Other Income 1.2 0.8 44.4% 0.6 91.8% 3.4 4.5 -25.8%
PBIDT 29.4 9.7 202.1% 27.8 5.6% 113.0 62.7 80.3%
Interest 1.6 1.5 1.9 7.0 8.0
PBDT 27.8 8.2 239.4% 25.9 7.3% 106.1 54.7 93.8%
Depreciation 4.3 3.3 28.9% 4.6 -7.2% 15.5 13.4 15.5%
PBT 23.6 4.9 382.6% 21.3 10.5% 90.6 41.3 119.2%
Tax (including DT & FBT) 7.0 3.1 6.8 24.8 16.0
Reported Profit After Tax 16.6 1.8 816.6% 14.5 14.2% 65.8 25.4 159.2%
Less: Minority Interest/ Share in profit 0.8 -0.4 0.3 1.8 -2.8
Reported Profit After Tax after MI 15.8 2.2 629.2% 14.3 10.4% 64.0 28.2 126.9%
EPS (Rs.) 4.6 0.6 629.2% 4.1 10.4% 18.5 8.2 126.9%
Equity 34.6 34.6 34.6 34.6 34.6
bps bps bps
OPM (%) 14.09 5.44 864.94 13.98 10.40 14.10 8.66 543.67
PATM (%) 7.86 1.32 654.54 7.32 53.94 8.23 4.20 402.83

Profit & Loss (Consolidated)
Particulars FY11 FY12 FY13 FY14 FY15E FY16E
Income from Operations 471.0 603.9 671.2 777.6 867.7 1085.3
Other Operating Income 0.0 0.0 0.0 0.0 0.0 0.0
Raw material consumed 247.0 303.8 352.3 377.8 422.6 531.8
Employee expense 66.1 84.3 98.7 109.7 120.6 144.3
Other Expenses 115.4 140.6 162.1 180.5 199.6 255.0
Total Operating Expenses 428.4 528.7 613.0 668.0 742.8 931.2
Other Income 4.7 2.6 4.5 3.4 4.0 4.5
EBITDA 47.4 77.8 62.7 113.0 129.0 158.6
Interest 6.0 6.8 8.0 7.0 9.0 10.0
Depreciation 8.7 12.9 13.4 15.5 17.0 19.0
PBT 32.7 58.2 41.3 90.6 103.0 129.6
Tax (including FBT & DT) 8.4 18.3 16.0 24.8 29.9 39.5
Adjusted PAT 24.3 39.8 25.4 65.8 73.1 90.1
Less: Minority Interest/ Share in profit 0.0 0.0 -2.8 1.8 2.0 2.0
Reported PAT 24.3 39.9 28.2 64.0 71.1 88.1
Balance Sheet (Consolidated)
Equity & Liabilities
Shareholders’ Funds 175.7 221.9 245.5 329.0 377.8 467.1
Share Capital 34.6 34.6 34.6 34.6 34.6 34.6
Warrant Allotment 14.5 14.5 14.5 14.5 14.5 14.5
Reserves & Surplus 126.6 172.8 196.4 279.9 328.7 418.0
Share application money pending allotment 0.0 0.0 0.0 0.0 0.0 0.0
Non-Current Liabilities 74.3 75.8 68.4 57.6 58.3 57.9
Long Term borrowings 69.7 63.8 53.9 40.5 37.3 32.8
Deferred Tax Liabilities (Net) 4.0 4.8 6.5 7.4 9.4 11.4
Other Long Term Liabilities 0.0 0.0 0.0 0.0 0.0 0.0
Long Term Provisions 0.2 0.2 0.2 0.2 0.2 0.2
Current Liabilities 136.2 156.2 166.0 187.1 196.6 207.2

Short Term Borrowings 44.4 49.0 60.3 57.7 54.2 47.7
Trade Payables 73.5 72.9 79.9 96.2 105.8 118.5
Other Current Liabilities 12.9 19.4 16.6 21.0 23.1 25.8
Short Term Provisions 5.5 14.9 9.3 12.3 13.5 15.1
Total Equity & Liabilities 386.2 453.9 480.0 573.7 632.7 732.1
Assets
Non-Current Assets 182.7 227.5 234.2 260.7 282.3 316.8
Fixed Assets 179.9 225.6 232.4 258.8 280.3 314.7
Gross Block 167.9 215.9 239.5 259.8 283.3 316.7
Depreciation 88.6 104.6 119.7 135.2 152.2 171.2
Net Block (Tangible Assets) 79.3 111.4 119.8 124.6 131.1 145.5
Intangible Assets 0.4 0.3 0.1 0.0 0.0 0.0
Capital Work-in-Progress 2.1 4.5 2.0 0.0 0.0 0.0
Goodwill On Consolidation 98.1 109.4 110.6 134.2 149.2 169.2
Non Current Investments 1.4 0.5 0.5 0.5 0.5 0.5
Long -term Loans and Advances 1.2 1.1 1.0 1.3 1.3 1.5
Other Non-Current Assets 0.2 0.4 0.3 0.2 0.2 0.2
Current Assets 203.5 226.3 245.8 313.0 350.4 415.3
Current Investments 0.0 0.0 0.0 0.0 0.0 0.0
Inventories 70.2 85.5 84.8 103.4 121.0 144.0
Trade Receivables 109.6 113.4 142.7 165.8 194.0 230.9
Cash & Cash Equivalents 9.8 19.5 11.3 30.7 25.4 29.5
Short Term Loans & Advances 4.5 2.8 4.2 9.5 9.9 10.9
Other Current Assets 9.5 5.2 2.9 3.6 0.0 0.0
Total Assets 386.2 453.9 480.0 573.7 632.7 732.1
Key Ratios (Consolidated)
Particulars FY11 FY12 FY13 FY14 FY15E FY16E
No of Equity Shares 3.5 3.5 3.5 3.5 3.5 3.5
Current Market Price 144.8 144.8 144.8 144.8 144.8 144.8
Market Capitalization 501.0 501.0 501.0 501.0 501.0 501.0
Enterprise Value 605.4 594.3 603.9 568.6 567.1 552.0
FD EPS 7.0 11.5 8.2 18.5 20.5 25.5

Cash EPS (PAT + Depreciation) 9.5 15.3 12.0 23.0 25.5 30.9
PE(x) 20.6 12.6 17.8 7.8 7.0 5.7
Book Value (Rs.) 50.8 64.1 71.0 95.1 109.2 135.0
P/BV (x) 2.9 2.3 2.0 1.5 1.3 1.1
OPM (%) 9.1 12.5 8.7 14.1 14.4 14.2
PBT (%) 6.9 9.6 6.2 11.6 11.9 11.9
NPM (%) 5.2 6.6 4.2 8.2 8.2 8.1
ROCE (%) 13.3 19.0 13.4 22.3 23.9 25.5
RONW (%) 13.8 18.0 11.5 19.5 18.8 18.9
Debt-Equity 0.6 0.5 0.5 0.3 0.2 0.2
Current Ratio 1.5 1.4 1.5 1.7 1.8 2.0
Mcap/Sales(x) 1.1 0.8 0.7 0.6 0.6 0.5
EV/EBITDA 12.8 7.6 9.6 5.0 4.4 3.5
1 Year Forward PE Chart
RETAIL RESEARCH Tel: (022) 3075 3400 Fax: (022) 2496 5066 Corporate Office
HDFC securities Limited, I Think Techno Campus, Building - B, "Alpha", Office Floor 8, Near Kanjurmarg Station, Opp. Crompton Greaves, Kanjurmarg (East), Mumbai 400 042 Phone: (022) 3075 3400 Fax: (022)
2496 5066 Website: www.hdfcsec.com Email: hdfcsecretailresearch@hdfcsec.com
Disclaimer: This document has been prepared by HDFC Securities Limited and is meant for sole use by the recipient and not for circulation. This document is not to be reported or copied or made available to
others. It should not be considered to be taken as an offer to sell or a solicitation to buy any security. The information contained herein is from sources believed reliable. We do not represent that it is accurate or
complete and it should not be relied upon as such. We may have from time to time positions or options on, and buy and sell securities referred to herein. We may from time to time solicit from, or perform investment
banking, or other services for, any company mentioned in this document. This report is intended for non-Institutional Clients

IFGL Refractories: Buy at CMP and add on declines

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