A Deep Dive into Indofil Industries Ltd.: Intrinsic Value Analysis

16 September 2024

Indofil Industries Ltd., a prominent player in the agrochemicals and specialty chemicals industry, presents a compelling investment case due to its significant holdings in Godfrey Philips India Ltd. and Modi Rubber Ltd. This analysis explores the company's intrinsic value and potential undervaluation.

Key Investment Holdings:

1. Godfrey Philips India Ltd.: Indofil Industries holds 65,45,020 shares of Godfrey Philips India Ltd. (CMP: ₹8235/share). The value of this holding stands at approximately ₹5389.8 crore.
2. Modi Rubber Ltd.      Additionally, the company holds 2,15,311 shares of Modi Rubber Ltd., valued at ₹143/share, amounting to around ₹3.02 crore.

• As of May 23, 2024, the total listed investment value of Indofil’s holdings in these two companies is ₹5392.9 crore. Outstanding Shares and Intrinsic Value Per Share. Indofil Industries has 2.29 crore outstanding shares. The intrinsic value of Indofil Industries per share comes out to approximately ₹2349/share, by only considering the investment value in Godfrey Philips and Modi Rubber.
• However, the company is currently trading at ₹1340/share, which reflects a significant discount of 43% from its intrinsic value.
  
  
• Broader Financials: Asset Value and Market Cap:For FY23, Indofil Industries’ total assets stood at ₹4132.56 crore, while the company’s current market capitalization is around ₹3076 crore. This translates to a further 26% discount in market valuation based on its asset base.
• Valuation Estimate: Combining Investment and Core Business: Indofil’s considerable stake in Godfrey Philips is worth ₹5400 crore, and when combined with its FY23 profitability (a PAT of ₹241 crore), applying a 20x multiple to earnings gives an estimated valuation of ₹12,000 crore. Based on this valuation, the expected price per share of Indofil Industries could be as high as ₹5200/share, showcasing significant upside potential compared to the current trading price of ₹1340/share.
• Conclusion: A Strong Investment Opportunity: Indofil Industries Ltd. is evidently trading at a substantial discount, both in terms of its intrinsic value based on investment holdings and its core asset value. With an expected target price of up to ₹5200/share, investors seeking value in the market should seriously consider the stock, particularly given the combination of its strategic investments and the potential for growth in its core business.
• This discrepancy between the company’s market price and its intrinsic value presents a compelling opportunity for value investors seeking long-term gains.