ICICI Direct Bullish On Small Cap Engineering Stock, Sees 41% Upside, Board Recommends Dividend

Leading brokerage firm ICICI Direct assigns Buy on Greaves Cotton Ltd, an Engineering sector stock, with a target price of Rs. 215/share. The stock is likely to surge 41% from its current level, considering the given target price. The company held a Board meeting held on May 12, 2023, where it recommended payment of a dividend of Rs. 0.90 per share i.e. 45% for the financial year 2022-23.

Recommends Dividend

"Recommended payment of dividend of Rs. 0.90 per share (45%) on the face value of Rs. 2 each for the financial year ended 31st March, 2023, subject to approval of the shareholders at the ensuing annual general meeting of the Company," the company said in an exchange filing.

Q4FY23 Results

According to ICICI Direct, GCL reported a strong set of Q4FY23 numbers. Standalone revenue came in at Rs. 436.8 crore (vs. I-direct estimate of Rs. 411.2 crore), up 15.3% YoY. Standalone EBITDA was at Rs. 51.8 crore (vs. I-direct estimate of Rs. 44.8 crore) and Rs. 29.1 crore in Q4FY22. On a consolidated basis, EBIDTA came in at Rs. 49 crore (vs. EBITDA of Rs. 41 crore in Q4FY22). Consequently, standalone adjusted PAT was at Rs. 29.5 crore (vs. I-direct estimate of Rs. 29.4 crore) up 75.1% YoY. Engine (auto, non-auto) volumes grew 32% YoY to 33,726 units.

Buy for a target price of Rs. 215/share

According to the brokerage firm, E-mobility and new initiatives businesses may provide much needed long term growth uptick amid languishing engine volumes. "We remain long term positive and retain our BUY rating on the stock. We value Greaves Cotton at Rs. 215 on SoTP basis," the brokerage has said.

About - Greaves Cotton Ltd. (GCL)

Greaves Cotton (GCL) is a leading diversified engineering company with a presence in automotive, non-automotive, aftermarket, retail, electric mobility solution and finance. Greaves Engineering business contributes to ~38% while Greaves Retail contributes to ~20% in FY23. E-mobility is expected to drive future growth (~42% of FY23 revenue).

Stock Overview & Performance

The stock last traded at Rs. 152.70/share, down 1.99% from its previous close of Rs. 155.80/share. It recorded its 52-week high on 8 September 2022 at Rs. 184.65/share and 52-week low on 14 March 2023 at Rs. 118.15/share, respectively.

The stock surged 3% in 1 week. It jumped 15.03% in 1 month. In the past 1 year, it jumped 2.93%. It has given 102.25% positive return and 14.34% in the past 5 years, respectively.

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 consult with certified experts before making any investment decision.