Buy Alicon Castalloy; target of Rs 500: Sharekhan

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Sharekhan's research report on Alicon Castalloy

Alicon reported better-than-expected Q3FY2021 results consolidated net profit growing by 35.7% y-o-y and 116.8% q-o-q driven by solid demand growth. We expect Alicon’s business to turnaround in FY2022E by registering PAT of Rs 24 crore versus a loss of Rs 8 crore in FY2021E. We expect a solid growth of 114% in FY23E, driven by revenue CAGR of 29% during FY2021E-23E and a 370 bps EBITDA margin expansion. The stock trades attractively at P/E multiple of 10.9x and EV/EBITDA multiple of 5.5x its FY2023E estimates.

Outlook

We recommend Buy rating on Alicon Castalloy Limited (Alicon) with a PT of Rs. 500, factoring its long-term average multiple on a strong traction in business outlook and an upgrade in earnings estimates.

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