Buy This Multibagger Small Cap Engineering Stock For Target Price Of Rs 285: ICICI Direct

ICICI Direct, a leading brokerage firm, in its report on Action Construction Equipment (ACE) has recommended investors 'buy' the stock of the company for an estimated target price of Rs 285 apiece. Considering the estimated target price the stock has the potential to gain 12% in 12 months if the stock is purchased at the current market price.

Action Construction Equipment (ACE) is an Indian construction equipment and material handling company. ACE has eight manufacturing and one R&D site in Faridabad, Haryana. The company has a capacity of 12000 construction equipment and 9000 tractors annually. ACE's product portfolio is divided into four main categories viz. agricultural equipment, construction equipment, road construction equipment and earth-moving machinery.

Stock Outlook

The current market price of the stock is Rs 255.40 apiece, gaining 2.60%. It was opened at Rs 250 apiece. The 52-week low of the stock is Rs 175 apiece and 52- the week high is Rs 291.75 apiece. It is an Engineering sector small-cap company having a market capitalization of Rs 3,041 Crore.

Return On Investments

The stock of the company in the past one week has gained 3.67%, whereas, in the past 1 & 3 months, it gained around 12.24% and 34.14%, respectively. Over the past 1 year, the stock gave a positive return of 27.73%. Its Returns in the past 3 and 5 years are good, as compared to short-term returns. In the past 3 years, it has given a multibagger return of 381.43% and in the past 5 years, it has given a multibagger return of 323.55%.

Q1FY23 Results

Action Construction Equipment reported good Q1FY23 results.

• Revenue for the quarter came in at Rs 497.7 crore, up 55 % YoY, down 3% QoQ.
• Absolute EBIDTA was at Rs 40.7 crore, down 14% QoQ, up 40.7% YoY.
• PAT was at Rs 45.3 crore vs. Rs 35.4 crore in Q4FY22 & Rs 19.3 crore in Q1FY22.

Buy For A Target Price Of Rs 285

ACE continues to tread on its growth path. The management has guided for 15-20% growth across segments. "We continue to remain positive and retain our BUY rating on the stock. We value ACE at Rs 285 i.e. 18x PE (FY24E)," the brokerage has said.

Key triggers for future price performance

• Cranes segment doing well. Contract from Government of Ghana and strong traction from the defence sector.
• Upcoming government & private capex providing fillip to the sector.

Disclaimer

The stock has been picked from the brokerage report of ICICI Direct. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.