Ventura Securities recommends Kirloskar Ferrous Industries
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The improving demand scenario in the capital goods industry, as well as an increase in infrastructure activities and development of industrial corridors, is expected to kick off a new growth cycle for Kirloskar Ferrous Industries, said brokerage house Ventura Securities.
Incorporated in 1991, Kirloskar Ferrous is one of the leading domestic manufacturers of foundry-grade pig iron and ferrous castings. The company supplies its products to the automotive (PVs, CVs and tractors) and capital goods (engines and industrial machinery) segments.
The brokerage recommended investors to the company's stocks with a price target of Rs 455, representing an upside of 105 per cent from the current market price of around Rs 220 over the next 18 months. In addition, enhanced capacity utilisation, cost optimisation initiatives and forward integration through the Indian Seamless Metal Tubes (ISMT) acquisition are key triggers for immediate pick up in performance of the company.
"The stalled backward integration into iron-ore mining, sans forest clearances, is expected to clear up by FY23 and is an added trigger to improving profitability post FY24."
Over the period of FY21-FY24, the brokerage expects the firm's revenue to grow at a compound annual growth rate (CAGR) of 25.6 per cent to Rs 4,037 crore.
