Sharekhan's research report on Honeywell Automation India
Q4FY2023 performance was healthy, led by strong improvement in margins and net profit. Revenue increased by 27% y-o-y to Rs. 850 crore. Operating profit increased by 59% y-o-y to Rs. 139 crore. OPM came in higher at 16.3% (up 327 bps y-o-y). Net profit increased by 54% y-o-y to ~Rs. 112 crore.. As per the company’s last media interaction, it expects uptick in execution and growth in top line as there are bright spots and opportunities in global markets. Margins are expected to improve from FY2023 levels, as inflation, chip shortage, and supply-chain issues are easing gradually.
Outlook
We retain our Buy rating on the stock with an unchanged PT of Rs. 45,000, as improving growth prospects across end-user industries, asset-light business model, strong parentage, and cash and bank balance of Rs. 2,380 crore justify the stock’s premium valuation.
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