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Buy Kalpataru Power; target of Rs 427: Anand Rathi

Anand Rathi is bullish on Kalpataru Power has recommended buy rating on the stock with a target price of Rs 427 in its research report dated May 16, 2022.

May 17, 2022 / 06:11 PM IST
The research firm ICICI Securities believes earnings of apparel brands and retail companies under their coverage may surprise positively from Q3FY22E as the likely demand recovery may result in better than expected margin performance. Some of the costs savings achieved during pandemic may sustain and coupled with high operating leverage may lead to higher than pre-covid margins from Q3FY22E.  Stocks like Trent, V-Mart and Aditya Birla Fashion and Retail are the preferred picks backed by their strong and consistent track record of execution.

The research firm ICICI Securities believes earnings of apparel brands and retail companies under their coverage may surprise positively from Q3FY22E as the likely demand recovery may result in better than expected margin performance. Some of the costs savings achieved during pandemic may sustain and coupled with high operating leverage may lead to higher than pre-covid margins from Q3FY22E.  Stocks like Trent, V-Mart and Aditya Birla Fashion and Retail are the preferred picks backed by their strong and consistent track record of execution.

 
 
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Anand Rathi's research report on Kalpataru Power


Prevailing challenges related to input costs and supply-chain disruptions hurt Kalpataru’s Q4 FY22 performance. Revenue fell 14% y/y and the EBITDA margin contracted 189bps y/y. On execution front, the company is well placed to deliver decent revenue growth (an 11% CAGR over FY22-24) led by its strong, Rs157.6bn, order book, 2.2x FY22 sales. Commodity pressures, however, will curb profitability, with FY23e/FY24e EBITDA margin expected to be benign at 8.7%/9.3%, compared to the past 10.5-11%. The recent fall in the stock price reflects the ongoing challenges and, hence, is attractive at 10.7x FY24e EPS.


Outlook


We maintain our Buy rating with a target price of Rs427 (assigning a 10x P/E to FY24e core earnings).


For all recommendations report, click here

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first published: May 17, 2022 06:08 pm
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