Buy Man Industries Ltd For Target Rs. 800 by Choice Institutional Equities Ltd
Robust Q1 Performance; NPC Ramp-up to Accelerate Growth
MAN posted a strong Q1FY27, driven by a robust top-line growth and improved margin. The consolidated order book remains well balanced between India and Saudi Arabia. The company is building a more diversified and resilient platform for sustained growth, with its upcoming greenfield expansion in Dammam for the coating plant and a stainless-steel plant in Jammu. The management reiterates guidance for FY27E, anticipating consolidated revenues of INR ~50 Bn and EBITDA margin of 13–15%.
Our positive stance is underpinned by the following key drivers:
1) Strong Earnings Trajectory: We forecast Revenue/EBITDA/PAT CAGR of 31/41/64% over FY26–29E, supported by a strong order book of INR 36.0 Bn and a healthy bid pipeline of INR 240 Bn, providing multi-year visibility.
2) Balance Sheet Upside from Non-core Asset Monetisation: Monetisation of Navi Mumbai land parcel is likely to generate INR 8–9 Bn in cash inflow in the next 3–5 years, equivalent to ~20% of the current market cap, strengthening liquidity and funding growth capex.
3) Margin Expansion Catalysts: We forecast ~301 bps EBITDA margin improvement over FY26–29E, driven by a higher mix of value-added products, scale-up benefits from increased capacity utilisation at existing and new plants and overall operating leverage gains
Valuation:
We reiterate our ‘BUY’ rating on Man Industries Ltd. (MAN) with a revised target price of INR 800/share (INR 690/share earlier), driven by an improved business outlook, a strong growth visibility, expected profitability expansion and capacity-led growth supported by a robust order book. We valued MAN using our EV/EBITDA multiple framework, assigning an EV/EBITDA multiple of 6x for FY28E. We consider this multiple to be conservative, given MAN’s strong ROCE trajectory, even under reasonable operating assumption
Risks: Possible slowdown in conversion of bid pipeline into order book and probably slow ramp-up of upcoming capacities are risks to our BUY rating.
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SEBI Registration no.: INZ 000160131
