Vesuvius India (VIL) is a subsidiary of the Vesuvius Group, UK. It is a leading metal flow engineering company. The company supplies high performance refractory material to the steel industry and other process industries used for lining vessels such as blast furnaces, ladles and tundishes to enable them to withstand high temperatures and/or corrosive attack. Shaped refractories account for ~37% of revenue in CY21 followed by unshaped refractories (~41%) and services (~ 22%) It holds ~11% market share in the Indian refractories industry
VIL reported a good set of Q1CY22* numbers. Revenues came in at ₹ 311.7 crore, up 25.4% YoY, aided by better demand in steel, cement EBITDA in Q1CY22 came in at ₹ 33.4 crore, up 41.6% YoY with margins at 10.7% but gross margins dipped marginally to ~38.5% YoY Consequently, PAT grew 44.1% YoY to ₹ 23.6 crore, improved by good margins
We expect decent earnings in the long term led by operational efficiency, product innovation, R&D and strong steel capex pipeline. We remain long term positive and retain our BUY rating on the stock
We value VIL at ₹ 1290 i.e. 25x on CY23E EPS
Focused on capturing domestic market share through faster growth in the manufactured goods segment through localised manufacturing and new product launches. Currently, manufactured goods contribute 50-55% Focusing on margin accretive solution oriented services segment, which has grown at 34.4% CAGR in CY13-20 and now contributes 26% to revenue compared to 4% in CY13 Higher steel production and technological advancement is expected to drive refractories demand. India’s crude steel production is expected to grow at a CAGR of ~5.5% to 121 MT in FY20P-23E backed by higher infrastructure spend and strong steel capex pipeline
: We also like Grindwell Norton in our coverage. Ambition to maintain market share in abrasives and increase market share in ceramic & plastics with gradual penetration of new value added products BUY with a target price of ₹ 1908
Vesuvius India (VIL) reported revenues at | 311.7 crore, up 25.4% YoY aided by better demand in steel, cement EBITDA came in at | 33.4 crore, up 41.6% YoY. EBITDA margins improved 122 bps YoY to 10.7% but gross margins dipped 100 bps to ~38.5% YoY Vesuvius India reported PAT at | 23.6 crore, up 44.1% YoY, improved by good margins Vesuvius India has completed the acquisition of industrial freehold land at Vizag at a cost of ~| 48.5 crore to meet future expansion/business needs
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