Buy

We recommend a BUY on the stock with a TP of Rs 550/share, implying an upside of 10% from the CMP.

We initiate coverage on Refractories, riding on the current boom in the steel industry. Heavy financial stimulus for infrastructure projects - domestic and global is expected to keep demand for refractories robust in the near future. Historically, refractory companies have been steady revenue compounder with stable margins, net cash balance sheets and superior return ratios, a remarkable contrast to its customer steel sector, thereby largely obviating the severe cyclicity of commodity companies. We expect recycling and localisation to support margins for refractory players. We initiate on IFGL Refractories and RHI Magnesita India (RHIM) with a BUY rating with IFGL being our preferred pick....

We initiate coverage on Refractories, riding on the current boom in the steel industry. Heavy financial stimulus for infrastructure projects - domestic and global is expected to keep demand for refractories robust in the near future. Historically, refractory companies have been steady revenue compounder with stable margins, net cash balance sheets and superior return ratios, a remarkable contrast to its customer steel sector, thereby largely obviating the severe cyclicity of commodity companies. We expect recycling and localisation to support margins for refractory players. We initiate on IFGL Refractories and RHI Magnesita India (RHIM) with a BUY rating with IFGL being our preferred pick....

During the quarter ended September 2021 (Q3CY21), global steel production excluding China registered a strong increase of 15.3% YoY but was down 2.7% QoQ. Chinese steel production for the quarter declined 14.2% YoY and 16.6% QoQ, in line with their strategy to keep steel output at 2020 levels as a part of their goal to reduce carbon emissions. With the decline in steel production and exports from China, there may be a gradual increase in steel production from EAF steel producing countries, which augurs well for both graphite electrode demand and realisations...

Consolidated other income for the quarter was at | 78 crore, up 39% QoQ, 15% YoY, higher than our estimate of | 64 crore. Better than expected other income aided consolidated PAT during the quarter. Ensuing PAT during the quarter was at | 150 crore, up 134% QoQ (our estimate: | 149 crore). What should investors do? Graphite India's share price has grown by ~3.7x over...

Graphite India (GIL) reported an operationally healthy set of Q4FY21 numbers, especially for the standalone entity. For Q4FY21, standalone operations reported capacity utilisation of 85% compared to 78% in Q3FY21, 49% in Q4FY20. Standalone operations reported topline of | 563 crore, up 24% QoQ, 3% YoY. EBITDA of standalone operations was at | 128 crore, while adjusted standalone EBITDA (EBITDA excluding onetime income and expense) was at | 188 crore. Standalone PAT was at | 114 crore (up 356% YoY, 23% QoQ). For Q4FY21, consolidated operations reported capacity...

Over the last few months, there has been a healthy uptick in global steel prices as well as global steel production levels. Graphite electrode players are likely to be one of the key beneficiaries of the current upcycle in steel. During the first four months of CY21, global crude steel production witnessed healthy growth, auguring well for graphite electrode majors. During January-April 2021, global steel production was at 663 million tonnes (MT), up 13.7% YoY. In addition to higher global steel output, steel prices witnessed healthy strength. Both above-mentioned factors, higher global...

In line with global steel prices, domestic steel prices have witnessed strong traction over the last eight to nine months, registering a healthy increase in the aforementioned period. Currently, domestic hot rolled coil (HRC) prices (ex-Mumbai) are at | 57500/tonne, up 58% from July 2020 low of | 36500/tonne. Healthy demand both on the global as well as domestic front has aided steel prices to remain firm at higher levels. The strength in steel...