IFB Industries rallies 57% in a month on healthy growth outlook

Shares of IFB Industries hit a fresh 52-week high of Rs 1,218 on the BSE after it rallied 10 per cent in intraday trade on Tuesday on expectations of strong growth outlook. In the past one month, the stock has surged 57 per cent, as compared to a 8 per cent rise in the S&P BSE Sensex.

IFB Industries’ operations consist of three divisions -- fine blanking, appliances and motor. The company continues being a market leader in the domestic front load washing machines as well as the dishwasher market, with a share of 40 per cent each.

The demand for dishwashers, microwaves and dryers was strong even during the Covid-19 led lockdown. IFB is in the final stages of concluding talks with original equipment manufacturers, and the company expects to manufacture 50,000 units per month during the peak season of January to June 2021.

India Ratings and Research (Ind-Ra) recently affirmed IFB Industries' long-term issuer rating at ‘IND AA-’ with a stable outlook.

Ind-Ra expects the company to achieve relatively higher revenue in the second half (October-March) of the financial year 2020-21 (2HFY21) than the April-September period (1HFY21). However, it sees overall FY21 revenue to decline by 6-8 per cent year on year (YoY). The decline is likely to be majorly on account of loss in revenue during the April-June quarter (1QFY21) due to lockdown. However, Ind-Ra expects it to be partially offset by increasing demand for dishwasher and washing machines and an import ban on ACs, which is likely to boost sales October-December (3QFY21) onwards. The improved realisation for the appliances division and demand revival for the two-wheeler segment would improve revenue from the fine blanking division. IFB’s revenue grew at a CAGR of 14 per cent over FY17-FY20.

Ind-Ra expects EBITDA margins to increase above 5 per cent in FY21-FY22 owing to lower import duty as a result of localisation of AC production, economies of scale that would enable lower raw material costs, improved realisation and cost-saving measures adopted by the company. Better acceptance of its top load washing machines and ramp-up in AC volumes will also enable the company to rationalise its selling costs in the medium term.

At 02:28 pm, the stock was trading 7 per cent higher at Rs 1,186 on the BSE, as compared to a 0.44 per cent rise in the S&P BSE Sensex. A combined 262,000 equity shares were changing hands on the counter on the NSE and BSE.