Sharekhan's research report on Honeywell Automation India
Q1FY23 performance beat our expectations on all fronts. Revenue rose by ~15% y-o-y to Rs 786 crore (versus our estimate of Rs 744 crore). Operating profit growth was restricted to ~5% y-o-y to Rs 122 crore due to high input cost despite proportionate decline in staff cost and other expenses, Consequently, OPM declined by 157 bps y-o-y to 15.5% (versus our estimate of 14.5%). Net profit was up by 11% y-o-y to ~Rs. 102 crore (versus our estimate of Rs 87 crore). Supply chain disruptions faced by the industry especially for semi-conductor chip and electronics components are easing out. We believe this shall boost company’s revenue and earnings growth going forward.
Outlook
We retain a Buy rating on the stock with a revised PT of Rs. 49,750 as improving growth prospects across end user industries, asset light business model, strong parentage, healthy balance sheet with cash & bank balance of Rs 2,006 crore (as on FY22) justify stock’s premium valuation.
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