Buy Tega Industries; target of Rs 1865: LKP Research

LKP Research is bullish on Tega Industries has recommended buy rating on the stock with a target price of Rs 1865 in its research report dated February 07, 2025.

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February 10, 2025 / 12:33 IST

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LKP Research's research report on Tega Industries

Tega Industries (Tega) had a good quarter, with consolidated revenues up 20.3% YoY, mostly due to a 24% YoY increase in Consumables which partially offset a 3% YoY decline in Equipment revenues, linked to customer-driven delays. Higher operational efficiency led EBITDA margins improve by 583bps to 22.3%, while APAT jumped 52.3% YoY to ₹543 mn, lifting PAT margins to 13.3% from 10.5%. The firm’s order book remains sturdy at ₹12.6 bn, with ₹7.8 bn slated for execution within the next year. Despite a six-to-eight-month delay in the Chile project due to pending site approvals, management emphasized contingency measures to avert capacity bottlenecks and ensure no revenue loss. Even as global supply chains struggle with inflationary pressures, rising freight costs, and logistical issues like container shortages and port congestion, macroeconomic factors like declining U.S. interest rates driving demand for gold and strong copper usage across sectors are predicted to sustain demand for consumable. Tega has kept its FY25 revenue growth outlook at 15%, with unchanged capex plans despite minor timing adjustments.

Outlook

The outlook reflects confidence in the company’s ability to navigate near-term headwinds while capitalizing on favorable commodity trends. Based on the performance in 9MFY25, we have tweaked our estimates for FY25E & FY26E and introduced FY27 estimates and rolled over our valuation to FY27E. We maintain our BUY rating with an unchanged PT of ₹1,865 (33x FY27E EPS).

For all recommendations report, click here