Centrum Broking
Vesuvius India (Buy)
CMP: ₹1,295
Target: ₹1,500
Vesuvius India Ltd (VIL) is engaged in manufacturing and trading of refractory goods. The company operates in the segment of manufacturing, trading and sale of refractories.
Our recent detailed interaction with management of Vesuvius on the sidelines of AGM pointed to i) positive long-term growth outlook in the wake of stressed steel assets likely to get acquired through NCLT by stronger players (who are key clients of VIL); ii) entry into new segments and value addition from local R&D centre at Visakhapatnam (commissioned in CY17); and iii) enough scope of growth from existing capacity coupled with productivity improvements aiding margins.
Vesuvius is cautiously optimistic for growth in CY18E but could see strong volume growth from CY19E led by several new steel capacities commissioning and ramp-up of volumes from stressed steel assets by new owners.
After remaining neutral on VIL for the last 18 months, we upgrade to ‘Buy’ with a revised target price of ₹1,500.
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