Penny Stock Below Rs 50 Is Recommended To Buy For TP Of Rs 71 In 24 Months; Gives 170% Returns In 2023

Lloyds Engineering Works is recommended to buy for a target price of Rs 71 in the next 24 months. This would imply more than 55% upside ahead in the penny stock that trades below Rs 50 apiece. The reason behind the recommendation is the robust outlook of Lloyds Engineering as the company is navigating growth seas through orders, investments and strategic alliances.

This stock already has a multi-bagger story for 2023. Year-to-date, the stock has gained by a breathtaking 168.76% on BSE. But in a year, the upside is overwhelming 211.15%.

Lloyds Engineering's share price ended at Rs 45.77 apiece, up by 4.90% on BSE last week during Friday's session. Its market cap is over Rs 5,228.60 crore.

Notably, the company is also among the dividend paying stocks on BSE. In 2023, the stock delivered dividends up to 10% amounting to Rs 0.10 per share. This is double the amount of dividend paid in 2022 to the tune of 5% or Rs 0.05 per share.

Brokerage Ventura Securities has initiated a coverage on Lloyds Engineering. It highlighted that with a resilient INR 921 crore order book, (3X FY23 sales), Lloyds Engineering Works Ltd (LEWL) envisions substantial growth, particularly in Marine and Civil projects, promising heightened revenue and profit margins. Strategically investing in capacity enhancement, LEWL solidifies its financial position as a net cash entity.

Further, the company is poised to thrive in the infrastructure and capex sector, LEWL strategically aligns with the anticipated surge in government spending, demonstrating a keen foresight in capitalizing on opportunities within this burgeoning industry.

Also, the brokerage pointed out that through strategic technological collaborations with industry leaders like The Material Works, Ltd. (TMW), Bhabha Atomic Research Centre (BARC), and TB Global Technologies Ltd (TBG), LEWL is poised to innovate and diversify its product portfolio, ensuring a competitive edge in the evolving market landscape. LEWL is set to issue 6.34 crore equity shares, raising Rs 99 crore for 15.5 per share. The purpose of this issuance is to secure funds for working capital needs.

That being said, Ventura Securities expects revenues to grow at a CAGR of 47% to Rs 996 crore. This stupendous growth in revenue is expected from -- higher order inflow from marine, steel and special civil engineering projects; LEWL's Strategic Capacity Boost for Future Revenue Growth; and strategic positioning in the infrastructure and capex sector, aligning with a government spending surge.

Moreover, the brokerage expects LEWL's EBITDA and PAT to grow at a CAGR of 59%/66% to Rs 209/168 cr respectively. EBITDA and PAT margins are expected to enhance by 430/500 bps to 21%/16.8% respectively. Subsequently, ROE and ROCE are expected to enhance by 610/750 bps to 24.9%/22.9% respectively.

Hence, the brokerage initiated coverage on LEWL with a price target of Rs 71 (47x FY26 P/E) per share. This TP is expected to be achieved in the next 24 months.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author or Greynium Information Technologies. The author, the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.