Sell Mishra Dhatu Nigam; target of Rs 360: ICICI Securities

ICICI Securities is bearish on Mishra Dhatu Nigam has recommended sell rating on the stock with a target price of Rs 360 in its research report dated August 19, 2024.

Broker Research

August 22, 2024 / 16:50 IST

Sell

26 Aug, 2025 12:21

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ICICI Securities's research report on Mishra Dhatu Nigam

Key highlights from MIDHANI’s concall: i) Q1FY25 performance was impacted by a) inventory adjustments, b) annual maintenance shutdown for certain equipment and c) negative operating leverage. ii) Exports contributed ~10% in Q1FY25. iii) O/s orderbook stood at 17.6bn (Defence: 80%; space: 6-7%; exports: 5% and others). iv) Rohtak armour factory booked revenue of INR 1.6bn while wide plate mill booked revenue of INR 2bn in FY24, and v) management has guided for a) revenue growth of >20%, b) order inflow of INR 11bn, c) exports of INR 1.5bn and d) improvement in EBITDA margin, in FY25. Despite factoring in revenue growth and improved EBITDA margin, we see unfavourable risk reward at CMP. Maintain SELL, TP of INR 360 based on 20x FY26E EBITDA.

Outlook

We believe MIDHANI might not be able to achieve its historical margin of 25%-plus of past six years due to the higher proportion of super alloys and increasing competitive intensity. Given the unfavourable risk reward at this price, we maintain SELL with an unchanged TP of INR 360/share based on 20x FY26E EBITDA.

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