HDFC Securities Initiates Buy On Small Cap Stock, Sees 25% Gains, Board Recommends 100% Dividend

HDFC Securities has assigned a "Buy" on the stock of Orient Cement Ltd. with a target price of Rs. 155/share. Given the target price, the stock is likely to give up to 25% potential upside if purchased at the current market price. The stock has recommended a final dividend of Rs. 1.00 per equity share i.e. 100% of Rs. 1 each for the financial year 2022-23.

Orient Cement is a small cap Cement Sector company of CK Birla Group. The company is primarily engaged in the manufacture and sale of Cement. It has a market capitalisation of Rs. 2,549.59 crore.

Recommends Dividend of 100%

According to an exchange filing by the company, "Recommended a final dividend of Rs. 1.00 (100%) per equity share of Rs. 1/- each for the year ended March 31, 2023, subject to the approval of shareholders at the ensuing Annual General Meeting (AGM) of the Company which shall be paid/dispatched to the shareholders within 30 days of declaration. Further, the Company had declared an interim dividend of Rs. 0.50 (50%) per equity share during the previous quarter of the financial year 2022-23, totaling the dividend amount to Rs. 1.50 (150%) per equity share of Rs. 1/- each for the financial year 2022-23."

Volume recovers QoQ; Capex plans revised, Buy for a target price of Rs. 155/share

HDFC Securities said, "We maintain our BUY rating on Orient Cement with an unchanged TP of INR 155/share (7x Mar-25E EBITDA). Orient reported 20/6% QoQ/YoY volume recovery in Q4FY23 (flattish five-year CAGR) on healthy non-trade demand. Unit EBITDA recovered ~INR 180 per MT QoQ on op-lev gains to INR 812 per MT (it reported low employee and other expenses despite healthy volume growth QoQ)."

It added, "Orient has changed its Capex plan-it will add a 3mn MT brownfield IU in Chittapur (expected by H1FY26E). The 10MW WHRS in Chittapur will get operational in Q1FY24 and boost margin FY24 onwards. Orient faces increased regional competition from recent expansions by big."

Stock Outlook

On Friday, the stock closed 1.81% down at Rs. 124.45/share on NSE. Its stock traded its 52 week high on January 01, 2023, at Rs. 148.70/share and 52 week low on June 20, 2022, at Rs. 95.60/share, respectively.

The stock has fallen 2.39% in the past 1 week. It jumped 3.02% in 1 month and 3.58% in 3 months, respectively. It declined 3% in the past 1 year. It has given 238.8% positive return. It has fallen 9.75% in the past 5 years.

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