Multibagger stock: HDFC Securities sees 20% rise in 6 months. Should you buy?

Market


Multibagger stock: In last one and half years, a lot of shares in Indian stock market have given more than 100 per cent return to its share holders. Asahi India Glass shares are one of those multibagger stocks in 2021. However, according to HDFC Securities research report, this share may further go northward and hit 581 per share levels in next two quarters. The brokerage has suggested ‘buy on dips’ strategy to stock market positional investors.

Highlighting the valuations that may fuel this multibagger stock, HDFC Securities report says, “Asahi India Glass will be a key beneficiary of growth in passenger vehicles production in India, coupled with rise in content led by premiumisation and rising share of SUVs. Asahi’s content per vehicle will rise with the improving segment mix and rise in penetration of value added glasses like IR (infra red) and UV (ultra violet) shield glasses. The demand outlook for the architectural glass has improved with the revival in residential real-estate demand. For the medium term the recent four initiatives being considered by the company could lead to healthy growth in top and bottom line.”

On fundamentals of the company, brokerage report says, “We expect PAT CAGR of 51 per cent over FY21-24E, led by EBITDA margin improvement on cost savings, import restrictions on float glass and reduction in net debt. Revenue is expected to grow at 19 per cent CAGR driven by higher share of float glass business. We expect RoE (Return on Equity) to improve from near 10 per cent in FY21 to near 21 per cent in FY24. AIS faces no threat from the advent of Electric Vehicles. Its presence in high value architectural segment will help grow revenues and maintain high margins.”

In Q2FY22 results, Asahi India Glass’ revenue witnessed strong growth of 25 per cent in Q2FY22 to 797 crore driven by solid growth in Float Glass business as real estate construction activities revived. Automotive Glass revenue increased 13.7 per cent yoy to 409 crore while Float Glass business reported 37.5 per cent revenue growth to 372 crore. Consolidated EBITDA increased 52.9 per cent yoy to 187 crore while margin expanded around 440 bps (4.40 per cent) to 23.5 per cent led by improved margin in the Float Glass business, offset partially by higher power & fuel expenses.

On its recommendation to stock market positional investors in regard to this multibagger stock, HDFC Securities says, “We feel investors can buy the stock in the band of 490 to 495 and add on dips to 437 to 442 for a base case fair value of 538 bull case fair value of 581.”

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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