Buy Esab India; target of Rs 2230: ICICI Direct

ICICI Direct's research report on Esab India

Esab India (Esab) is a leading player in the Indian welding consumables and equipment industry with a market share of over 23% in the domestic structural welding consumable market and ~30% in domestic equipment market. It mainly operates in two segments viz. welding consumables (70%) and welding equipment (30%). Esab’s balance product portfolio, debt free status, strong global brand image and parentage (Colfax Corp) augur well in the long run. However, there could be short-term Covid-19 impact in FY21E.

Outlook

Further, Esab is currently trading at 26.8x P/E on FY23E (vs. forward median P/E band of 28x, up cycle and down cycle average TTM P/E of 35x and 12x, respectively). We value Esab at Rs 2230/share, implying multiple of 33x on FY23E EPS with a BUY rating on the stock.