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Buy Ramkrishna Forgings: target of Rs 1480: Sharekhan

Sharekhan is bullish on Ramkrishna Forgings has recommended buy rating on the stock with a target price of Rs 1480 in its research report dated October 11, 2021.

October 12, 2021 / 01:22 PM IST
HDFC Securities research report's outlook and valuations:  500bps growth outperformance over FY21-24E as compared to 250bps earlier). We roll over valuations to Sepemtember-23E and increase target multiples for most of the companies in our coverage universe. We remain broadly constructive across the sector and ahead of consensus on growth/EPS; our preferred picks are Infosys, HCLT, Mphasis and Zensar."" title="HDFC Securities research report's outlook and valuations:  "The YTD EPS upgrades (consensus) have been led by mid-tiers such as Tata Elxis, Mindtree, Mastek, and Persistent Systems, ranging from 20-40 percent and, within tier 1, by Wipro (~15%). We expect the sector (coverage universe) to post 13 percent and 14.5 percent USD revenue/APAT CAGR over FY21-24E compared to 6.5/7.5 percent over the past five years. The mid-tier valuation premium relative to tier 1s may sustain, based on its relative outperformance (>500bps growth outperformance over FY21-24E as compared to 250bps earlier). We roll over valuations to Sepemtember-23E and increase target multiples for most of the companies in our coverage universe. We remain broadly constructive across the sector and ahead of consensus on growth/EPS; our preferred picks are Infosys, HCLT, Mphasis and Zensar."" width="100%" height="auto" >

HDFC Securities research report's outlook and valuations:  "The YTD EPS upgrades (consensus) have been led by mid-tiers such as Tata Elxis, Mindtree, Mastek, and Persistent Systems, ranging from 20-40 percent and, within tier 1, by Wipro (~15%). We expect the sector (coverage universe) to post 13 percent and 14.5 percent USD revenue/APAT CAGR over FY21-24E compared to 6.5/7.5 percent over the past five years. The mid-tier valuation premium relative to tier 1s may sustain, based on its relative outperformance (>500bps growth outperformance over FY21-24E as compared to 250bps earlier). We roll over valuations to Sepemtember-23E and increase target multiples for most of the companies in our coverage universe. We remain broadly constructive across the sector and ahead of consensus on growth/EPS; our preferred picks are Infosys, HCLT, Mphasis and Zensar."

 
 
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Sharekhan's research report on Ramkrishna Forgings


Results beat estimates, with revenue, EBITDA and PAT growing 40.2% q-o-q, 46% q-o-q, and 103.6% q-o-q. Over FY21-23E, earnings are likely to clock a strong 190.7% CAGR, driven by a 35.5% CAGR in domestic revenue, a 45.7% CAGR in export revenue and a 310 bps rise in EBITDA margins. Stock trades below historical average multiples at a P/E of 16x and EV/EBITDA of 8.2x on its FY2023E estimates.



Outlook


We maintain a Buy on Ramkrishna Forgings Limited (RKFL) with a revised PT of Rs. 1,480, led by a continued growth momentum for commercial vehicles in India, Europe and North America and an upgrade in earnings estimates.


For all recommendations report, click here


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first published: Oct 12, 2021 01:22 pm

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