Buy Tega Industries; target of Rs 1236: LKP Research

Buy

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

Choose Stock Exchange: BSE LIVE NSE LIVE

26 Aug, 2025 12:21

Volume

Todays L/H

More

×

Tega Industries reported decent results although the topline was marred by congestion at the port thereby impacting revenues. The outlook ahead remains positive given better visibility and pipeline of work along with healthy orderbook. Net sales for Q1FY24 were at ₹2.7bn (+9.7% YoY) wherein Non Mill Liner grew at 34% and Mill liner revenues saw small de-growth due to congestion on the port (temporary one off condition due to cyclone alerts) leading to ₹200 mn impact on the mill lining revenues. Gross margins have almost remained flat YoY while EBITDA margins contracted by 421bps to 14.1% on lower sales impacted from port congestion and one time professional expenses of ₹40mn on account of the Mcnally Sayaji acquisition integration into the main stream. Lower operating leverage led to PAT degrowth of 7.4% YoY for Q1FY24. Management reiterated that in medium term sales growth is expected to be 15% CAGR across both segments, while margins in consumable business have further room to expand as pass through of higher RM costs is still underway and expect blended EBITDA margins to be in 21-22% range.

We maintain our positive stance on Tega on a) higher penetration opportunity for Dynaprime liners, to deliver 25-30% CAGR over FY23-25E, b) cross selling opportunities of other products and equipment (McNally Sayaji acquisition) to aid in outpacing the industry growth, c) green field expansion in Chile to increase growth opportunity in LATAM and d) sustainable EBITDA margins at 21-22% due to operating leverage. We maintain BUY with a revised TP of ₹1,236.

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.