Unlocking the Intrinsic Value of Redox Limited (ASX:RDX)

Redox Limited (ASX:RDX) is an Australian company that supplies and distributes chemicals, ingredients, and raw materials in Australia, New Zealand, the United States, and internationally. With a market capitalization of AU$2.2 billion, RDX has shown strong earnings growth and a steady dividend payout. This article aims to analyze the intrinsic value of RDX by examining its financial health, profitability, and future growth prospects.

Financial Health

* Debt-to-Equity Ratio: 0.36 (as of 28 January 2025)
* Current Ratio: 1.54 (as of 28 January 2025)
* Quick Ratio: 1.23 (as of 28 January 2025)

Redox Limited's strong financial health is evident in its low debt-to-equity ratio, indicating a manageable level of debt, and its robust current and quick ratios, which suggest ample liquidity to meet short-term obligations.

Profitability

* Earnings before Interest and Tax (EBIT): AU$135.3 million (FY2023)
* Earnings before Interest, Tax, Depreciation, and Amortization (EBITDA): AU$136.8 million (FY2023)
* Net Income: AU$90.24 million (FY2023)
* Earnings per Share (EPS): AU$0.1875 (FY2023)
* Return on Assets (ROA): 13.49% (FY2023)
* Return on Equity (ROE): 36.31% (FY2023)

Redox Limited's strong profitability is reflected in its high EBIT, EBITDA, and net income, as well as its impressive ROA and ROE. The company's earnings growth of 11.8% in the past year further underscores its profitability.

Future Growth

* Revenue projections: AU$1,258 million (FY2024), AU$1,269 million (FY2025), AU$1,413 million (FY2026)
* Net Income projections: AU$87.56 million (FY2024), AU$98.97 million (FY2025), AU$113.8 million (FY2026)
* EPS projections: AU$0.172 (FY2024), AU$0.1729 (FY2025), AU$0.2142 (FY2026)

Redox Limited's future growth prospects are promising, with projected revenue and net income growth of 11.55% and 13.03% in FY2025, respectively. The company's EPS is expected to grow by 11.78% in FY2026, indicating strong earnings growth potential.

Valuation

* Price-to-Earnings (P/E) Ratio: 21.48 (as of 28 January 2025)
* Price-to-Book (P/B) Ratio: 2.45 (as of 28 January 2025)
* Enterprise Value (EV) to Earnings before Interest, Tax, Depreciation, and Amortization (EV/EBITDA): 12.97 (as of 28 January 2025)

Redox Limited's valuation multiples suggest that the company may be relatively expensive compared to its historical averages and industry peers. However, its strong financial health, profitability, and future growth prospects indicate that the company's current valuation may be justified.



In conclusion, Redox Limited's strong financial health, impressive profitability, and promising future growth prospects suggest that the company's intrinsic value is robust. While its current valuation multiples may indicate that the company is relatively expensive, its fundamentals support a positive outlook for investors. As the company continues to execute on its growth strategy and maintain its strong financial performance, investors can expect RDX to deliver steady returns in the long term.