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Orient Refractories – Coverage closure after 4 + years with gains of around 570%

Dear Sir,

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.

 

Best Regards,

Ekansh Mittal
Research Analyst
http://www.katalystwealth.com/ 
Ph.: +91-727-5050062, Mob: +91-9818866676
Email: info@katalystwealth.com

 

Rating Interpretation

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

 

Research Analyst Details

Name: Ekansh Mittal     Email Id: ekansh@katalystwealth.com    Ph: +91 727 5050062

Analyst ownership of the stock: No

Details of Associates: Not Applicable

Analyst Certification: The Analyst certify (ies) that the views expressed herein accurately reflect his (their) personal view(s) about the subject security (ies) and issuer(s) and that no part of his (their) compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report.

Disclaimer: www.katalystwealth.com (here in referred to as Katalyst Wealth) is the domain owned by Ekansh Mittal. Mr. Ekansh Mittal is the sole proprietor of Mittal Consulting and offers independent equity research services to retail clients on subscription basis. SEBI (Research Analyst) Regulations 2014, Registration No. INH100001690

The views expressed are based solely on information available publicly and believed to be true. Investors are advised to independently evaluate the market conditions/risks involved before making any investment decision

A graph of daily closing prices of securities is available at www.bseindia.com (Choose a company from the list on the browser and select the “three years” period in the price chart

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Disclosure (SEBI RA Regulations)

Whether the research analyst or research entity or his associate or his relative has any financial interest in the subject company/companies and the nature of such financial interest – No

Whether the research analyst or research entity or his associates or his relatives have actual/beneficial ownership of 1% or more securities of the subject company (at the end of the month immediately preceding the date of publication of the research report or date of the public appearance) – No

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