Buy Anup Engineering Ltd For Target Rs.1265 - ICICI Direct
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Decent show amid challenging environment…
About the stock: Anup Engineering is one of the leading process equipment manufacturers with special focus on heat exchangers.
* The company has a facility in Odhav, Gujarat and is currently in the process of making a greenfield expansion in Kheda
* The company aims to achieve a topline target of | 1000 crore by 2025
Q1FY22 Results: Anup reported decent Q1FY22 results.
* Revenue for the quarter was at | 52 crore, up 72% YoY, down 61% QoQ
* EBIDTA margins contracted ~355 bps YoY & ~270 bps QoQ coming in at 24%. Absolute EBIDTA came in at | 12.5 crore, up 50% YoY
* Ensuing PAT came in at | 7.9 crore. Tax rate for the quarter was at 19.6%
What should investors do?
Anup Engineering is on the cusp of entering into a new trajectory led by strong growth in topline.
* We revise our rating from HOLD to BUY on the stock.
Target Price and Valuation: We value Anup at | 1265 i.e. 18x P/E on FY23E EPS.
Key triggers for future price performance:
* Upcoming clean room facility expanding Anup’s reach into exotic metallurgy
* Timely commercialisation of Kheda capex ensuring sustained growth
* Sustained EBIDTA margins in the range of 24-26%
Alternate Stock Idea: Apart from Anup Engineering, in our capital goods coverage we also like NRB Bearings.
* It offers a play on needle roller bearings, which are largely used in auto applications
* BUY with a target price of | 175 per share.
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