Refex Industries Ltd. has emerged as a star performer with its standalone Q4 PAT report that displays a notable increase. The Chennai-based company is standing tall with a PAT (Profit After Tax) of Rs 50.67 crore in the latest quarter, which is an unprecedented stride towards growth. Let’s delve deeper into the specifics that have propelled this surge and charted the journey of Refex Industries.
A Tale of Transition in Business Verticals
Refex Industries, a Group B company, has seen a massive transition in its business verticals over the past few years. Initially focused on refrigerant gas production, coal ash handling, and power trading, the firm has now expanded its horizons. Its refrigerant gas is used primarily as refrigerants, foam-blowing agents, and aerosol propellants. Furthermore, it offers services for handling and disposing of fly ash, crushing of uncrushed coal, and coal trading to power plants.
Moreover, the company has received approval for power trading, aiming to supply electricity and other services to power users, producers, state electricity boards, power utilities generating, and distribution companies.
Revenue Mix: The Transformation
Interestingly, Refex Industries has witnessed a remarkable change in its revenue mix. While Coal & Ash handling rose to 82% in FY21 from nil in FY18, the share of Solar Power dipped to 2% in FY21 from 16% in FY18. The Refrigerant Gas segment also experienced a downturn, falling to 3% in FY21 from 13% in FY18. Furthermore, the sale of service went down to 13% in FY21 from 58% in FY18. Meanwhile, Mineral trading was phased out completely in FY21 from 13% in FY18.
The Production Capabilities
Refex Industries has shown impressive manufacturing prowess. The company boasts facilities for procuring ash from power plants in various locations and a solar power plant at Barmer, Rajasthan. With a thermal power installed capacity of 234 GW, it is producing ash at the rate of 20,000 MT per day from four plants.
Innovations & Strategies
Notably, Refex Industries is gearing up for a nationwide launch of Zero Global Warming Potential (Zero GWP) gases within the next 12 to 18 months. This initiative will give the company an early mover advantage in the Zero GWP space.
Furthermore, the company has successfully tested ‘Reverse Logistics.’ This strategy reduces freight cost by utilizing the same rail racks that deliver coal to power plants to transport ash to cement companies.
Financial Highlights
In August 2020, the company raised Rs. 24.87 Cr through a rights issue from its existing shareholders. Despite receiving a penalty notice from BSE and NSE for not having the minimum required directors, the company managed to get a waiver by citing the pandemic-induced lockdown as a reason for this lapse.
As of March 2021, the company had investments worth 74 crores in Units of RKG Fund I (AIF), although it did have a contingent liability of Rs. 113 Cr related to corporate guarantees.
Future Focus
The company has a firm focus on market share expansion. It aims to up its share from the current 8.5% to 10% in the refrigerant gases segment in FY22.
Market Indicators
Refex Industries, with a market cap of ₹ 944 Cr and a face value of ₹ 10, has a stock P/E of 8.12. Despite having a dividend yield of 0.00%, it boasts an impressive ROCE of 48.1% and ROE of 46.6%.
Growth Trajectory: A Closer Look at the Quarterly Results
In the last four quarters (Dec 2022 – Sep 2023), Refex Industries has shown an upward trend. Sales have increased from Rs. 380 Cr in Dec 2022 to Rs. 630 Cr in Mar 2023, marking an increase of about 66%. Operating profit also swelled from Rs. 41 Cr to Rs. 74 Cr in the same period.
Net profit has shown a healthy increase too, moving from Rs. 26 Cr in Dec 2022 to Rs. 51 Cr in Mar 2023. This transition points to the tremendous potential of Refex Industries, manifesting the growth that the company has managed to achieve.
Refex Industries’ stellar performance has locked in a 20% upper circuit, which, along with the robust fundamentals and excellent financial health, makes it a strong contender in the market. The steady progress, coupled with strategic innovations and a diversified business portfolio, certainly makes the company one to watch out for.
