Prabhudas Lilladher's research report on Harsha Engineers International
Harsha Engineers International (HARSHA) reported 3.9% YoY revenue growth with EBITDA margin expanding by 149bps YoY to 11.9%. Domestic demand remains resilient, driven by increased cage outsourcing and benefits of China+1; however, large-size cages and Japan customer sales remain below expectations. European market continues to remain slow, while US demand has also softened owing to inventory destocking. Romania’s outlook remains challenging, with losses set to continue as efforts to enhance the product mix are yet to yield tangible results. However, China is showing steady improvement, with significant topline and profitability growth expected in FY25. HARSHA’s long-term outlook remains positive given its 1) market leadership in bearing cages, 2) turnaround in Romania & China, 3) greenfield capacity expansion plans, and 4) multiple levers for growth viz. i) bearing cage outsourcing, ii) capex by global bearing players in India, iii) growing demand for bronze bushings, and iv) Japan wallet share gains. The stock is currently trading at a P/E of 31.4x/23.8x/19.4x on FY25/26/27E earnings. We roll forward to Sep’26E and value the stock at a P/E of 24x Sep’26E (26x FY26E earlier). Upgrade to ‘Accumulate’.
Outlook
We revise our FY25/26E EPS estimates by -10.0%/-3.6% factoring in continued slowdown in Romania and Europe but upgrade the rating to ‘Accumulate’ from ‘Hold’ with a revised TP of Rs561 (Rs565 earlier) owing to the recent correction in stock price.
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
