Industries Qatar Q.P.S.C. (IQCD)- Investment Note – upgrade to Accumulate

Issue Date: 10 September 2023

We review our coverage of Industries Qatar (IQCD: QATAR) and increase our target price to QAR 15.0 and update our rating to Accumulate on the stock, considering an upside potential of 10.6% from current levels. The stock is currently trading at a P/E of 19.1x based on our 2023 estimates, compared to its historical average 1-year forward P/E of 11.7x. The stock is set to show growth with increased capacity for fertilizers, improved operating rates for Steel & Petchem and expected recovery in realizations post FY23e.

Investment Thesis 
Industries Qatar (IQCD) is a prominent Qatar-based holding company engaged in three main business segments: Petrochemical, Fertilizer, and Steel. IQCDexhibits strong performance and growth potential across its diverse portfolio. With strategic investments, operational excellence, and favorable market dynamics, IQ is well-positioned to capitalize on global demand and deliver sustained revenue growth.
• Demonstrates strong performance and expansion plans for future growth through strategic investment plans.
• Increasing end market demand along with expected better product prices post FY23e enhances growth prospects for the company.
• The company demonstrates robust cash flow from operations and strategic capex management, indicating financial strength and future growth opportunities. 
• IQCD maintains a low debt-to-equity and favorable net debt-toEBITDA, highlighting its solid financial position and prudent leverage. It consistently delivers an attractive dividend yield and payout.

Valuation and risks: Our valuation is based on a mix of DCF (80% weight), and multiples approach (10% weight each to P/E and EV/EBITDA based multiples). Key downside risks: Low product prices, market instability and operational risk due to unplanned shutdown.