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AnandRathi
Orient
Refractories (Buy)
CMP: ₹117
Target: ₹170
Orient Refractories Limited, an ISO 9001 quality certified company, is engaged in the business of manufacturing and selling of refractories and monolithics.
Orient Refractories’ Q3 FY17 sales grew 11 per cent y-o-y, its margins expanded 20 bps to 19.8 per cent and earnings grew 12 per cent.
With support from the government, the steel industry is expected to grow 15-20 per cent in the next 10-12 months. Despite a short-term liquidity crunch, we believe that mini- and mid-sized steel mills are likely to gain due to improving demand in the steel sector. Hence, we maintain CAGRs over FY16-19 of 14 per cent in sales and 19 per cent in earnings.
Risk: Sluggish manufacturing activity at user industries would affect sales growth and margins.
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