The last time IFB Industries Ltd shares were traded on the NSE, they were worth 834.55, an increase of 0.51%. Its last price on BSE was 836.60, which was up by 0.91%. All of the shares traded on NSE and BSE added up to 6,318. It made a total of Rs 0.53 crores from all of its sales.
The 52-week high for IFB Industries Ltd was 1,129.95 on November 22, 2022, and the 52-week low was 800 on February 8, 2023. IFB Industries Ltd stock price has decreased by -5% in the last month. Over the past year, it has gone down by -9.09%.
Overview of IFB Industries Ltd
With the help of its subsidiaries, IFB Industries Limited makes and sells home appliances, mostly in India. It has home washing machines, microwave ovens, home and industrial dishwashers, clothes dryers, and modular kitchens. It also has kitchen appliances like hobs, chimneys, built-in ovens, air conditioners, and industrial washing systems with dry cleaning and other finishing equipment.
The company also sells various parts and accessories for cars, trucks, and other vehicles, fine-blanked components, cold-rolled steel strips, and tools and machine tools that go with them, such as straighteners, decoilers, strip loaders, and others. It also sells its goods outside of the country. Indian Fine Blanks Limited used to be the name of the company. IFB Industries Limited was founded in 1974 and is based in the Indian city of Kolkata.
Pros
- High Shareholder Pedigree: The company has a strong base of long-term shareholders, which makes the stock less likely to be speculated on and more stable. This works well for people who invest in stocks for the long term.
Cons
- Low Sustainable RoE: The company’s sustainable return on equity is lower than the expected cost of capital. This means that the underlying business will lose value over time because it can’t get better returns on capital.
- Low-Interest Coverage: The company’s interest coverage ratio is only 1.29 times, which means that a big chunk of its operating profits goes to paying interest to its debt holders. This means that equity shareholders will get less income and cash flow, which is bad for returns.
- The industry with many ups and downs: The company has many ups and downs, so its earnings and cash flows are hard to predict. This will cause stock prices and returns to be very volatile, hurting shareholder returns.
- Low Ability to Set Prices and Lots of Competition: The business has very little ability to set prices and is vulnerable to pressure from competitors, which can greatly affect shareholder returns.
- Poor Working Capital Cycle: The company’s working capital cycle is very bad, taking 111 days. This means it needs to invest a lot of money in working capital. This makes it harder for the business to generate free cash flow and hurts shareholder value and returns.
- Extremely Speculative Stock: The company’s stock is very speculative, which is likely to hurt long-term shareholders of the company.
IFB Industries wants to make more expensive imports locally.
IFB Industries, which is based in Kolkata, wants to make more high-cost imports locally as a way to reduce risk. For washing machines and air conditioners, import substitution is being thought about. According to the company’s annual report for 2020-21, electric controller imports were replaced in the washing machine segment, and the AC segment is where the company is putting most of its attention right now.
In FY20, the company also made the inverter AC range, which is popular now. IFB’s appliance division’s sales grew by more than 6% from the previous year to about 2250 crore, and its EBITDA margins grew by more than 90% to 193 crores.
Performance got better since of a better mix of products, higher prices, better management of material prices, and lower operating and administrative prices. Even though the pandemic is making people feel bad, there is still a good amount of customer demand. It also said that high-capacity washers, dishwashers, and other appliances are in high demand in tier 2 and 3 towns.
With new front-load and top-load washing machines and microwaves coming out and material costs going down, the outlook is still good. Localization makes its operations less vulnerable to future changes in the value of its currency. Since November of last year, the prices of washers and air conditioners have increased, causing commodity prices to go up.
Business trends
IFB said that there had been a lot of interest in top-load washing machines with a capacity of 6.5 kg or more and those with built-in heaters. In FY21, the number of ACs sold went down by 10%. (to 81000 from 90000). Even though there was a recovery in Q4FY21, there were more problems in the June quarter. But starting in July, new customers and people waiting to buy should come in.
Clothes dryers and home dishwashers got a lot of attention and grew quickly. Demand for clothes dryers is no longer seasonal, and dishwashers, which were in high demand after the pandemic, are now being sold more. The business wants to sell more than 100,000 dishwashers each year.
Built-in ovens, stoves, and chimneys are seen as luxury items that will become more popular as kitchens become more modern. There are plans to grow in the modular kitchen market, but the results haven’t been as good as hoped. The company plans to change how its stores look after it has grown in Goa and Bengaluru.
Segmenting, targeting, and positioning
Segmentation divides a sale into groups based on demographics, needs, priorities, shared interests, and other psychographic or behavioral traits that help understand the target audience. When we talk about how IFB Group is divided, we say that it is known for selling and making high-quality products. It has divided its business into groups of people who want to live in style.
Targeting is when a business chooses which potential customers it wants to sell to. The targeting method involves dividing the market into segments, choosing the most important segments, and figuring out which products will be sold in each segment.
So, in this case, IFB Industries is trying to reach people with high middle-class incomes who like to live luxurious lives. It sells high-end products and has set up a high-end pricing system for its business.
When positioning a product or service, the focus is on how the customer sees it as the competition. This is important for getting an edge in the market. Mahindra & Mahindra always positions itself as a quality and premium brand to give it an edge in the market.
Even though there is much competition in the consumer market, the company has kept its high prices because it knows that customers will always choose quality over price. So, the company has been able to keep its value-added policy since its loyal customers know that it offers the best product for that price.
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