On 1st Sep’18 we shared coverage closure update with our premium members and the same is produced below for your reference.
Orient Refractories (NSE – ORIENTREF) – Jan’14 Alpha stock
Date: 1st Sep’18
CMP – 274.50 (BSE); 275.50 (NSE)
Rating – Negative and coverage closure; this is not an investment advice (refer rating interpretation)
Orient Refractories 3 Year’s price chart Source: BSE India
Orient Refractories investment recommendation was initiated in Jan’14 at around 42 odd levels. Since then the company has paid dividends of around Rs 9.1/- per share. The initiation report on Orient Refractories can be accessed HERE
The company in its recent meeting approved the merger of RHI India and RHI Clasil into Orient Refractories. All three companies are part of the RHI Magnesita group, the leading global supplier of high-grade refractory products, systems and services.
In lieu of the merger, the shareholders of RHI India and RHI Clasil will be allotted shares of Orient Refractories and the equity shares of Orient Refractories will increase from 12 crore to around 16.1 crore.
Based on the FY 18 performance of all the 3 companies and the expanded equity base, at around current price the market is valuing the merged entities at around 31.5 times FY 18 earnings.
However, on checking the presentation shared by the company, the profitability of both RHI India and RHI Clasil improved significantly only in FY 18 and therefore we are not sure of the sustainability of the performance of the entities being merged.
Also, Orient’s major competitor Vesuvius has reported a dip in performance in the last few quarters. Lastly, considering the recent run up in stock price and expansion in valuations in comparison to the overall sector, we would like to take this as profit booking opportunity and also closing coverage on the stock.
Ph.: +91-727-5050062, Mob: +91-9818866676
Positive – Expected return of ~15% + on annualized basis in medium to long term for investment recommendations and in short term for Special situations
Neutral – Expected Absolute return in the range of +/- 15%
Negative – Expected Absolute return of over -15%
Coverage closure – No further update on the stock
% weightage – allocation in the subject stock with respect to equity investments
Short term – Less than 1 year
Medium term – Greater than 1 year and less than 3 years
Long term – Greater than 3 years
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Name: Ekansh Mittal Email Id: firstname.lastname@example.org Ph: +91 727 5050062
Analyst ownership of the stock: No
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