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Buy Honeywell Automation India; target of Rs 49,750: Sharekhan

Sharekhan is bullish on Honeywell Automation India has recommended buy rating on the stock with a target price of Rs 49,750 in its research report dated November 09, 2022.

November 13, 2022 / 09:55 PM IST
 
 
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Sharekhan's research report on Honeywell Automation India

Q2FY2023 performance was ahead of our expectations on the profit front, while it missed the mark on the revenue front. Revenue rose by 7.7% y-o-y to Rs. 794 crore (versus our estimate of Rs 855 crore). Operating profit increased by 19% y-o-y to Rs. 128 crore (in-line with estimate) due to a proportionate decline in RM cost and other expenses. Consequently, OPM improved by 152 bps y-o-y to 16.1% (versus our estimate of 15.7%). Net profit was up 38% y-o-y to ~Rs. 118 crore (versus our estimate of Rs. 114 crore). Supply-chain disruptions have not been completely resolved; however, they are improving gradually, which bodes well for growth.

Outlook

We retain our Buy rating on the stock with an unchanged PT of Rs. 49,750, as improving growth prospects across end-user industries, asset-light business model, strong parentage, and healthy balance sheet with cash and bank balance of Rs. 2,096 crore (as on Q2FY23) justify the stock’s premium valuation.