Orient Refractories may test Rs 140, says Daljeet Singh Kohli

Daljeet Singh Kohli of India Nivesh Securites told CNBC-TV18, "Orient Refractories is taken over a by a company called RHI of Austria which is the second largest refractory manufacturer in the world. The good part about Orient Refractories which we like was that despite the fact that the steel industry has gone through such a bad phase in last 4-5 years, this company has actually grown its revenue by almost 20 percent every year and it has maintained its EBITDA margin at 18-20 percent. So, the growth has come not at the cost of margins. RHI coming in actually the growth has even gone up. Normally we feel that because of the MNC big partner coming in, the local listed partner might get neglected and they also have their unlisted company here. However the good part is that they are going together to the market and offering complete solution.""Other important factor for Orient Refractories is that they are into Tundish management which is again a niche area where they get a higher margin. Almost 15 percent of their business comes from that where they actually manage the process flow control for the steel companies which again is a very high margin thing," he said."So, there is a lot more potential for this company and as the steel cycle improves this company can actually go much higher. So, as of now we have given a target of Rs 140 or something but this is again a rolling target. Once the steel cycle moves around then this company will perform even better. They are more attune to the smaller steel companies rather than the larger steel companies where again they will have larger margins, larger say in their business."