Buy Action Construction Equipment; target of Rs 215: ICICI Direct

ICICI Direct's research report on Action Construction Equipment

Action Construction (ACE) hosted an analyst meet (virtual) wherein the management brought us up to speed on the recent business updates and also provided us an outlook on the sector. The infrastructure industry is witnessing robust traction with upcoming capex in metro, rail, manufacturing, road and real estate sector. Hence, demand for cranes and construction equipment is expected to see a significant improvement. The management remained assertive on the fact that ACE would become a counter cyclical company powered by 50-60% growth in CE & 25-30% growth in crane, agri equipment & material handling segments.

Outlook

Hence, this calls for a multiple upgrade given the company is on the cusp of posting historically high growth rate. We value ACE at 11x FY23E EV/EBIDTA and maintain BUY rating with a revised target price of Rs 215 (earlier Rs 160).