Unlisted Shares

Strength

• Frick India Limited was incorporated as a public limited company in 1962 in collaboration with Frick Company USA. Today, Frick India Limited is the largest equipment manufacturer and turnkey solution provider for Industrial refrigeration in India.
  
• The company installs turnkey projects and uses its 62 years of experience in industrial refrigeration compressor manufacturing in good stead to give energy-efficient and reliable refrigeration systems in India and 50 other countries
• The company's manufacturing facilities are located at Faridabad (Haryana), an industrial township in the periphery of the national capital & are spread over a 22-acre multi-block complex.
  
• The main customer base in the dairy industry and food processing industry.
• CRISIL Ratings has reaffirmed its ‘CRISIL A-/Stable/CRISIL A1’ ratings on the bank facilities of Frick India Limited (FIL).

Market Position

• The presence of over five decades in the industrial refrigeration industry and technologically advanced equipment such as screw compressors, reciprocating compressors, chillers, and stainless steel and aluminum coils, have enabled an established market position. The company benefits from regular orders from its customers in the dairy, food, and agriculture industries.

Revenue Growth

• A swift order execution has led to a 29% increase in revenue, largely driven by loyal customers in the dairy, food, and agriculture industries, consequently elevating the company's financial performance from ₹ 280.48 Cr in FY22 to ₹ 362.93 Cr in FY23.
  

Net Profit Margin

• The company's net profit margin is 7.9% which has grown by 35% from ₹ 16.36 Cr in FY22 to ₹ 28.52 Cr in FY23. The company's net profit margin has increased by 2% from 5.9% in FY22 to 7.9% in FY23 due to a rise in revenue from the completion of orders.
  

Return Ratios​

• The ROE of the company stands at a rate of  13.1% in FY23 and showed a growth of 56.6% compared to FY22 and the ROCE of the company also stands at a rate of 15.1% in FY23 and also showed a growth of 83.4% compared to FY22.

Investment Thesis 

• There's a potential for revenue growth next year as pending orders get fulfilled, potentially boosting net profits and margins. Frick India Ltd currently trades at a PE of 45x, while the industry PE sits at 85x, suggesting undervaluation.
• However, compared with industry PE at 85x, it will appear fairly valued at an expected MPS of ₹38,254. Yet, slower inventory turnover and other financial metrics raise subtle cautionary flags. Consequently, it's recommended to hold the shares.