Recently we shared a detailed report on a leading MNC company, Orient Refractories (NSE Code – ORIENTREF) with our members. The stock was recommended to Alpha and Alpha plus members in Jan’14 at around levels of 42-43 (CMP – 75).
In Orient Refractories, what we liked was that we were getting an extremely well-managed company promoted by MNC at a PE of 10 and dividend yield of around 2.5%.
Markets usually attribute higher valuations to stocks of well managed MNCs as these are in general professionally managed firms with clean corporate governance practices.
Basic details on Orient Refractories
Orient Refractories manufactures a wide range of Refractory and Monolithic products for the iron and steel industry and its clients include large domestic integrated steel producers and mini steel plants such as Steel Authority of India, Mukund Steel, Tata Iron and Steel Company, RINL – Vizag, Sunflag Iron, Lloyd Steel, Usha Martin and the Jindal Group.
ORL got listed recently as it entered into a Scheme of Arrangement with Orient Abrasives Limited (OAL) and their respective shareholders for demerger of the refractory business of OAL into Orient Refractories Ltd. The demerger was carried out in Nov’11 and the stock got listed on 9th Mar’12.
Soon thereafter, there was a change in management and shareholding control in the company. In Mar’13, Mr. S G Rajgarhia and other ex-promoters of the company sold their 43.62% stake in the company to Dutch US Holding B.V. at Rs 43/- per share and the latter also acquired another 26% equity shares from public shareholders through open offer. As on date Dutch US Holding B.V. holds 69.62% equity in the company. It is important to note here that Dutch US Holding B.V. is promoted by RHI AG.
RHI AG is an Austrian company specializing in producing heat-resistant refractory products for the steel, cement, glass, lime and non-ferrous metals industries. It is the largest manufacturer of refractory products with close to 1.8 billion Euros in annual sales. Thus, the acquisition by Dutch US Holding makes Orient Refractories a part of the largest and probably the best managed refractory products manufacturer.
Disclaimer: Our Alpha and Alpha + members have invested in Orient Refractories. This report is being shared only for the purpose of information; do not construe the same as investment advice. In case you invest in Orient Refractories, please carry out your own due diligence.