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Tube Investments soars as Motilal Oswal Financial slaps 'buy' tag on company after starting coverage

The brokerage believes that the new strategy of the company could be a trigger for rerating in the future

Mumbai / June 24, 2022 / 11:51 AM IST
 
 
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Shares of Tube Investment rose sharply on June 24 after Motilal Oswal Financial Services initiated coverage on the stock with a ‘buy’ rating and set a price target of Rs 1,900, implying an upside of 25 percent over the next 12 months.

“Tube Investments offers diversified revenue streams, with strong growth in the core business, ramp-up in CG Power and optionality of new businesses incubated under TI-2 strategy,” the brokerage said in a note on June 24.

It believes that the new strategy of the company could be a trigger for rerating in the future as the company looks to reinvest its cash flows to seed new platforms for long term growth and acquire stressed assets.

At the same time, the company’s existing business in engineering, metal formed products, cycles and others will continue to be the bedrock of the new strategy. Tube Investments wants to drive 25 percent annualised growth in net profit over the coming years.

Overall, Motilal Oswal Financial Services expects revenues to grow 15 percent on an annual basis for the next three years. Further, the brokerage sees net profit growing at an annual rate of 20 percent over the coming three years.

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“We are not building in for any benefit from new ventures under TI-2 strategy in our consolidated performance,” the brokerage said.

At 11:40 am, shares of Tube Investments were up 3.6 percent at Rs 1,569.95 on the National Stock Exchange.

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first published: Jun 24, 2022 11:51 am
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