Section1: Company Overview and Fundamental Insights:

1.1 Company Overview:

ADF Group Inc (TSX: DRX) is involved in the design and engineering of connections, fabrication, including industrial coating, and the installation of steel structures and steel-built ups, as well as miscellaneous and architectural metalwork. It serves the client base in the non-residential construction industry, such as general contractors, project owners, engineering firms and project architects, and other steel structure fabricators. The company operates in the United States and Canada. Kalkine’s REIT Report covers the Investment Highlights, Key Financial Metrics, Risks, Technical Analysis along with the Valuation, Target Price, and Recommendation on the stock.

1.2 The Key Positives, Negatives, Investment Highlights and Risks

1.3 Top 5 Shareholders:

The top 5 shareholders together form ~13.44% of the total shareholding. Canadian Erectors, Ltd. and Paschini (Pierre) hold a maximum stake in the company at ~­­­10.24% and ~0.91%, respectively.

1.4 Key Metrics:

The company reported robust growth in its financials in FY 2024, along elevated adjusted EBITDA, which is a key positive. Moreover, it posted a sequential increase in its margin profile and liquidity along declining debt to equity ratio demonstrating its strength and adaptability.

Section 2: Business Updates and Financial Highlights

2.1 Recent Updates: The below picture gives an overview of the company’s recent activities, such as the announcement regarding dividend distribution and clocking higher gross margin.

2.2 Insights of FY 2024 Financial Performance:

Section 3: Key Risks and Company Outlook

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

The stock has witnessed an upside of ~2.91% and ~57.63% over the last 1 week and 1 month respectively. Moreover, the stock is trading above the average 52-week high price of CAD 15.61 and 52-week low price of CAD 2.24 providing an opportunity to ride the trend.

4.2 Fundamental Valuation

Valuation Methodology: EV to Sales Multiple Based Relative Valuation (Illustrative)

Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is May 6, 2024. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Dividend Yield may vary as per the stock price movement.  

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.