Buy Belrise Industries; target of Rs 192: LKP Research

LKP Research's research report on Belrise Industries

The Pune based company Belrise Industries Limited (Belrise), primarily a 2W auto ancillary with largely powertrain agnostic products, is well placed for growth as it is adding OEMs and establishing new ties. The company is rolling out new products and improving CPV via premiumization. The company’s 4W business (9% of topline in FY25) also should see a strong escalation on the back of strong order-book, improved technological capabilities through H-One acquisition, entry into Japanese OEMs and fresh ties with a leading Japanese PV OEM to reach 12-13% of topline by FY28. We believe increase in 4W share shall further improve the CPV and lead to re-rating of the stock. We anticipate Belrise to deliver ~34% PAT CAGR over FY25-28E as operating performance (13% EBITDA CAGR) is multiplied by de-leveraging impact.

Outlook

The planned and proposed transfer of related party entities should simplify group structure and thus be value accretive, adding to re-rating levers. Any occurrence of hiving off or reduction in the low margin Trading business would further drive profitability of the stock. We initiate with a BUY.