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Refex Refrigerants

Printed From: The Equity Desk
Category: Investment Ideas - Creating winning portfolios!
Forum Name: Stock Synopsis
Forum Discription: A bried discussion of companies on very specific matters. Normally this is the prelude for further research as always members would be discussing quality companies with good management only
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=1498
Printed Date: 21/Apr/2025 at 1:17am


Topic: Refex Refrigerants
Posted By: deveshkayal
Subject: Refex Refrigerants
Date Posted: 30/Dec/2007 at 6:56pm

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.


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"You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett


Replies:
Posted By: smartcat
Date Posted: 30/Dec/2007 at 10:52pm

Refex is doing a smart thing by packaging and advertising what is basically a commodity (HFC). So Refex would be a better investment bet than pure commodity companies like Guj Fluoro or Navin Fluorine.

But -
 
- Companies like Guj Fluoro/Navin Fluorine being manufacturers of HFC can claim carbon credits. Refex just imports and packages them. I'm guessing Refex does not accrue and hence cannot sell carbon credits.
 
- Since Refex is pushing into car air-conditioning systems, it would be difficult for it to grow at a faster pace than the auto-industry. It needs to concentrate on clients like Blue Star  (which will grow faster than automobile companies).
 
- Is the company predicting 10x growth in revenues based on the Montreal  Protocol? If yes, then remember that HFC is basically a commodity and in 2 years, lots of capacity can come up by that time.
 
- Refex is importing gases in liquefied form from China and regassifying it. I'm guessing that it is cheaper to manufacture it in China. So obviously, other Chinese companies will have an advantage over Refex.

Posted By: furkanalam
Date Posted: 01/Jan/2008 at 2:05pm
Refex Refrigerants Limited, a Chennai based leading refrigerants management solutions provider and BSE listed company has entered into a partnership with TV 18, India’s fastest growing media and Entertainment Company.

Speaking on the development, Mr. Anil Jain, Managing Director of Refex Refrigerants Limited, said Refex is on a high growth path and our association with TV 18 will propel us to greater heights and we plan to work closely with TV 18 to achieve the goal of building Refex into a global market leader. This partnership is a significant milestone for the company and a testimony to the inherently strong business model and environmentally conscious approach followed by Refex. Refex is poised for great gains as it had always been a enthusiastic and vocal supporter of environmentally friendly HFC products which would not deplete the ozone and help build a better environment to live in.

Commenting on the tie up B. Sai Kumar, Group COO, Network 18 said, “We are very happy with this partnership since we believe that Refex’s aggressive growth plans combined with our ability to reach them in an engaging way and the reach of our multi-platform media vehicle will ensure that Refex is a significant player in the fast-growing environmental friendly refrigeration market.”

Posted By: smartcat
Date Posted: 01/Jan/2008 at 2:14pm
Partnership with BCCL for print and TV18 for Television and Radio. Looks like these guys have big brand building plans.

Posted By: furkanalam
Date Posted: 01/Jan/2008 at 2:36pm
Absolutely...Already have seen ads of Refex on CNBC TV18....What say guys.....A good potential here...

Posted By: Chaman
Date Posted: 02/Jan/2008 at 1:48pm
Originally posted by deveshkayal

1) 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.
 
2) Refex plans to acquire three companies each in the Far East, Central Europe and South America.
 
Looks like an interesting firm, but a few questions.
1) What is the entry barrier to other firms in China or outside to copy the same business model and compete with Refrex?
2) What is intended purpose of the acquisitions in Far East, Central Europe & South America? Asking so, because it seems the big export markets are US & Europe. Is it to support/ serve developed economies in the vicinity or the domestic demand there? What is the size of opportunity in these developing geographies?

Posted By: Rinku
Date Posted: 04/Jan/2008 at 9:37pm

Refex Refrigerants slips despite overseas acquisition plan

Refex Refrigerants slipped 1.35% Rs 212.10 at 14:51 IST on BSE, after the company said its board will consider an investment of up to $20 million in an overseas acquisition, in a meeting to be held on 5 January 2008.

The company made this announcement during trading hours today, 4 January 2008.

Meanwhile, BSE Sensex was up 344.94 points or 1.70% to 20,690.14.

On BSE 57,956 shares were traded in the counter. The stock had an average daily volume of 5.23 lakh shares in the past one quarter.

The stock hit a high of Rs 217.50 and a low Rs 210 so far during the day. The stock hit a 52-week high of Rs 222 on 3 January 2008 and a 52-week low of Rs on 22 August 2008.

The small-cap scrip had outperformed the market over the past one month till 3 January 2008, gaining 24.39% as compared to the Sensex’s return of 3.08%. It had also outperformed the market in the past one quarter, 214.10% as compared to the Sensex’s rise of 14.47%.

The company’s current equity is Rs 15.20. Face value per share is Rs 10.

The current price of Rs 212.10 discounts its Q2 September 2007 annualized EPS of Rs 9.47 by a PE multiple of 22.40.

The board will also consider Q3 December 2007 results on 5 January 2008.

Refex Refrigerants’ net profit rose 344.4% to Rs 3.60 crore on 48.9% growth in net sales to Rs 23.95 crore in Q2 September 2007 over Q2 September 2006.

The company is engaged in refilling and marketing non-ozone depleting refrigerant gases known as HydrofluroCarbons (HFCs). HFCs are used in auto air conditioners, room air conditioners, refrigerators and refrigerating equipments.

capitalmarket.com

Posted By: deveshkayal
Date Posted: 07/Jan/2008 at 9:33am
9 Months ended Dec 31,2007 EPS at Rs.7.62 compared to 3.44 for FY07.
PAT up by 159.41%
Sales up by 50.03%


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"You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett

Posted By: tigershark
Date Posted: 08/Jan/2008 at 2:43pm
results are good but i feel equity dilution is coming up how strong are entry barriers?

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understanding both the power of compound return and the difficulty getting it is the heart and soul of understanding a lot of things

Posted By: nitin_jagtap
Date Posted: 08/Jan/2008 at 2:56pm

My understanding is that the entry barriers arent really high , I would assume that it wouldnt take much of any effort for Navin /GFCL to enter this space , the main concern I feel is on the supply side if they have good long term sourcing agreements then it shouldnt be a problem.Usually the sourcing agreements in terms of price are validated very often due to the volatility in the prices, as this is more like a commodity.

Pls correct If I am wrong.

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Warm REgards
Nitin Jagtap

Posted By: kumarrvq
Date Posted: 08/Jan/2008 at 10:10pm

Will the refilling business attract more competitors if the potential is huge?

--> Jain says gas source is a major entry barrier. "There are around eight HFC manufacturers in the world. While some manufacturers are not willing to sell to India, others already have their tie-up.

--> In addition finding experienced people to man the refilling plant is very difficult. So the threat of new refillers is not big," says Jain.
--> Incidentally Refex Refrigerants' Singapore promoter, Kaltech Engineering & Refrigeration Pte Ltd, is one of the largest traders of HFC gas. "Last year Kaltech Engineering sourced 8,300 tonnes of HFC, which thios year is targeted to increase to 12,000 tonnes," Jain adds.
--> In India there are only three HFC manufacturers — SRF Limited, Navin Fluorine and Gujarat Fluorochemicals — so imports meet the demand.


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Thanks & Regards,
Harry

Posted By: deveshkayal
Date Posted: 08/Jan/2008 at 10:04am

Excerpts from CNBC-TV18’s exclusive interview with T Anil Jain:

 

Q: Net sales at Rs 22.6 crore have seen a fillip of about 49.76%. What is it that you hope to be able to pack in for the full year at Refex?

 

A: We will end the year with Rs 80-85 crore. If the season goes well, we may touch Rs 90 crore also. Even with regard to net profit, we would be able to get 50% addition to the current nine months in the last quarter.

 

Generally, in our industry, the first three months i.e. January-March or up to April, is the main season, wherein lots of air conditioners get into production in big volume than the rest of the nine months. So, we look forward for better sales and good result at the end of the year.

 

Q:  What is the update on the supply, that was supposed to start to units in the automobile industry i.e. http://indiaearnings.moneycontrol.com/sub_india/comp_results.php?sc_did=TM03 - Tata Motors , http://indiaearnings.moneycontrol.com/sub_india/comp_results.php?sc_did=HM - Hindustan Motors etc?

 

A: We are supplying to Hindustan Motors and the product approval has come in for Tata Motors. We need to wait for commercial negotiation.

 

Q: When do you expect that to come by?

 

A: About a week or so.

 

Q: What is the projection for FY09 internally? What are the targets that you working with on sales and profits?

 

A: We are working on a target of about Rs 200-250 crore, because the new plant of 3,000 tonne will also commence production, by the end of February. So, roughly about Rs 250 crore is what we are targeting currently for 2009, with a bottomline of about Rs 32-33 crore.



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"You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett

Posted By: nitin_jagtap
Date Posted: 16/Jan/2008 at 10:06am
Script is showing good strength in this weak market on low volumes. Any updates Devesh?

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Warm REgards
Nitin Jagtap

Posted By: deveshkayal
Date Posted: 17/Jan/2008 at 11:03pm
I have not come across any news or brokerage reports. But it is a multibagger for sure.

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"You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett

Posted By: Rinku
Date Posted: 17/Jan/2008 at 11:30am

http://dealcurry.wordpress.com/2007/03/21/bccl-to-buy-35-in-refex-refrigerants/ - BCCL to buy 3.5% in Refex Refrigerants

Posted by http://dealcurry.wordpress.com/ - dealcurry on March 21, 2007

The Economic Times http://economictimes.indiatimes.com/News/News_By_Industry/Cons_Products/BCCL_to_buy_35_in_Refex_Refrigerants/articleshow/1785740.cms - reports that Bennett, Coleman & Company Limited (BCCL) will pick up a stake of around 3.5% in Chennai-based Refex Refrigerants, for an undisclosed sum. Refex is engaged in refilling-ozone friendly refrigerants and marketing refrigerant products in India. Refex is the only player in the country which has the distinction of refilling and marketing hydro-fluoro-carbons, which is a non-ozone depleting, environmentally safe refrigerant developed to replace chlorofluorocarbons in several air conditioning and refrigeration applications.

Any idea if they picked up?

Posted By: PrashantK
Date Posted: 29/Jan/2008 at 1:12am
Deveshjee...in the past two weeks this stock has come down from 212 to
139.....any news on this one ??

Posted By: nitin_jagtap
Date Posted: 29/Jan/2008 at 7:19am
I guess its in t2t and selling spree may still not be complete ..nevertheless from a fundamental prespective there is nothing that I have heard of

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Warm REgards
Nitin Jagtap

Posted By: deveshkayal
Date Posted: 30/Jan/2008 at 12:48pm
Small caps are the worst hit when market falls. Karuturi, Core Projects all have come down significantly from their highs.

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"You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett

Posted By: shivkumar
Date Posted: 30/Jan/2008 at 3:44pm
Originally posted by deveshkayal

Small caps are the worst hit when market falls. Karuturi, Core Projects all have come down significantly from their highs.


Karuturi has been hit by the after effects of the violence in Kenya

Posted By: nitin_jagtap
Date Posted: 16/Mar/2008 at 11:36am
Is HFC going to be big post 2010.

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Warm REgards
Nitin Jagtap

Posted By: PrashantK
Date Posted: 17/Apr/2008 at 7:54pm
Deveshjee... Refex annual results are out...it is showing a full year EPS at
7.92 ...  is it too low ?? Please let me know if you have any updates on
this one....

Posted By: deveshkayal
Date Posted: 17/Apr/2008 at 10:50am

It is below my expectation. When I started this thread, i expected an EPS of around Rs.10. Still it is a good long term play.



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"You don't need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beat the guy with a 130 IQ. Rationality is essential"- Warren Buffett

Posted By: experteye
Date Posted: 06/Oct/2008 at 5:51pm
Refex refrigerants stock has fallen from a level of 300+ to now at 96/= ? Is there some management problems? It is still good long term bet.What is best level to enter ?

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more risk,more profit but have a vision before taking risk,itis all about investment in equities market.

Posted By: Mohan
Date Posted: 06/Oct/2008 at 10:14pm
Is it still at 96.00 ?
Good price to sell. commodity business. Could go down another 50 % since bears are selling wherever there is still some meat left on stocks.


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Be fearful when others are greedy and be greedy when others are fearful.

Posted By: experteye
Date Posted: 07/Oct/2008 at 9:58am

Yes, Mohan bhai, I too agree with you.



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more risk,more profit but have a vision before taking risk,itis all about investment in equities market.


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