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This midcap stock rose almost 800% since 2017 - why is this analyst still upbeat?

Interestingly, Prabhudas Lilladher sees a further upside of up to 34 percent in the stock, based on its price target of Rs 266, and has an 'accumulate' rating on it.

April 27, 2018 / 11:28 AM IST
 
 
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Midcaps were a success story all through 2017, with the segment having returned almost 50 percent through the last year.

Bhansali Engineering was one such scrip. Between the beginning of 2017 and now, the stock has risen by close to 800 percent.

Interestingly, Prabhudas Lilladher sees a further upside of up to 34 percent in the stock, based on its price target of Rs 266, and has an 'accumulate' rating on it.

The brokerage pointed out how the bank reported a decent set of results for the March quarter, with revenue growing 57 percent year on year, and 17 percent quarter on quarter, as realisations improved.

“Post results, we have revised our volume assumptions downwards but the same is compensated by higher realisation and margin assumption based on the optimism shown by the management on higher sale of speciality grades,” Prabhudas Lilladher said in a report.

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The brokerage has changed cut its estimates on how much the company will likely produce in FY19 from 93,150 tonnes to 82,000 tonnes. Estimates for FY20 were cut from 120,650 tonnes earlier to 105,000 tonnes.

However, the brokerage kept its estimates on the company's profit figures unchanged at Rs 150 crore for FY19, and Rs 200 crore for FY20.

“Going forward, over the next 2 years (FY18-20E), we expect the company to grow revenues at 91.3 percent CAGR to Rs 1,970 crore, and EBITDA by 104.0 percent CAGR to Rs 320 crore, due to richer product mix as well as better fixed cost absorption, and profits by 101.2 percent to Rs 200 crore,” Prabhudas Lilladher said in its report.
Moneycontrol News
first published: Apr 27, 2018 10:59 am

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