Buy Harsha Engineers International; target of Rs 439: Prabhudas Lilladher

Prabhudas Lilladher's research report on Harsha Engineers International

HARSHA is well placed for long-term growth given its 1) leadership position in the domestic and global organized bearing cages market (~50-60% share and ~6.5% share respectively), 2) long standing relationships with top bearing players, 3) excellence in tooling & customized precision engineering and 4) increasing share of higher value products in the mix. We estimate Revenue/PAT CAGR of 8.6%/25.5% over FY22-25E driven by outsourcing of cage production and localization of manufacturing in India, scale up in bronze bushings, precision stamped components and large-size cages, interest and power cost savings, and turnaround in Romania operations. The stock is currently trading at a P/E of 20.2x/16.3x on FY24/25E earnings. Initiate ‘BUY’.

Outlook

We initiate coverage on Harsha Engineers International (HARSHA) with a ‘BUY’ rating at a target price of Rs439, valuing it at a PE of 22.0x FY25E.