Refex Refrigerants -Targetting 10 times revenues in 3 yrs!
Refex is the only player in the country which has the distinction of refilling and marketing hydrofluorocarbons, which is a non-ozone depleting, environmentally safe refrigerant developed to replace chloro-flouro-carbons in several air conditioning and refrigeration applications. Refex has a technical collaboration with Kaltech Engineering and Refrigerants Pvt Ltd, Singapore.
CMP: Rs.202
Market Cap: Rs.307 crs
FY08 EPS: around Rs.10
H1FY08 Revenues: Rs.40 crs
FY08 : 80-100 crs
H1 PAT: 6 crs
FY08 PAT: around 15 crs
FY10 Revenues: Rs.1000 crs.
Margins FY07: 10%. It will improve after raising the installed capacity of cylinders from 480 tonne to 3,000 tonne per annum.
Today the current market for HFCs is about 34,000 tonne in the country. So after the implementation of the Montreal Protocol by January 2010, the shift will be to HFC-based business. So, definitely the market is big for this.
Refrex plans to export hydro fluorocarbons or HFCs to developed markets like the US and Europe after importing it from China and Singapore. The company imports refrigerant gases in liquefied form, regasifies it and packages it in cans in India.
Refex plans to acquire three companies each in the Far East, Central Europe and South America and has set aside Rs.200 crs for the same which will be raised through FCCBs leading to a dilution of around 8-10%. The acquisitions should be completed by mid next year. Refex is also planning to pick up stakes in Chinese raw material suppliers. Ideally, Refex will pick up 40% stake in the raw material supplier.
The company has received a special import licence for importing 2000 MT of HCFC-based refrigerants from DGFT. The licence would generate revenues up to Rs 40 crore in 6-9 months. Automobiles would contribute about 40% to both topline and bottomline in FY08.
Refex is also planning a big push of HFC gas cans for car air-conditioners. Refex recently launched HFC gas in cans. All air-conditioned cars need to change gas once in 24 months. At present, gas change in car air-conditioners cost anything between Rs 1,000 to Rs 1,200. With this initiative the cost will come down by 50% for the car owner.
Clients includes Hyundai Motors, Tata Motors, Hindustan Motors, Reva Electric Car Company, sports car maker San Motors, Toyota Kirloskar, Godrej and Boyce, Blue Star, Carrier Aircon.
Bennet & Coleman holds 3% stake in the company. ICICI Prudential holds this stock in two of their funds. MF holdings generally convey good promoter background.
Refex is trading at a FY08 PE of 20 and a market cap/sales of 3x. If the company indeed achieve what they are aiming to do by 2010, then even assuming a market cap/sales of 2x, the stock can turn out to be a 6-7 bagger in 3 years.