Midcap Auto Ancillary Stock Hits 52-Week High, Jumps 750% In 3 Yrs, Buy For 22% Gains: ICICI Direct

ICICI Direct assigns a "Buy" call to Ramkrishna Forgings Ltd. (RKF) with a target price of Rs. 400/share. The brokerage sees 22% potential upside from its current level, considering the given target price and the current market price of the stock. RKF is an Auto Ancillaries sector midcap stock having a market capitalisation of Rs. 5,212.40 crores.

Q4FY23

According to the brokerage firm, RKF reported a healthy performance in Q4FY23. Consolidated sales were up 14.7% QoQ to Rs. 892 crore, with EBITDA at Rs. 194 crore, up 12.1% QoQ. EBITDA margins came in at 21.8%, down 50 bps QoQ. Sales volume in Q4FY23 came in at 38,588 tonnes, up 15.6% QoQ with corresponding EBITDA/tonne at Rs. 50,276/tonne. Consolidated PAT in Q4FY23 was up 12.1% QoQ to Rs. 68.5 crore.

Buy for a target price of Rs. 400/share

According to the brokerage firm, RKF's stock price has grown at ~16% CAGR in the past five years from Rs.160 in April 2018, vastly outperforming the Nifty Auto Index. "We retain BUY rating amid strong new order wins, unchanged vision to grow in high double digit in coming years, sustainable margin profile of ~20%+ and RoCE accretive organic as well as inorganic expansion plans. Upgrading our estimates, we now value RKF at Rs. 400 i.e. 15x P/E on FY25E EPS of Rs. 26.6 (earlier target price of Rs. 335 per share)," the ICICI Direct said.

Stock Overview

The stock closed 1.04% higher at Rs. 329.40 apiece. The stock hit a new 52 week high at Rs. 334.70 apiece, while the 52 week low on 20 June 2022 at Rs. 146 apiece.

It gained 3.1% in 1 week. It gained 15.13% in 1 month and 24.02% in 3 months, respectively. It has given 73.69% positive return in 1 year. The stock has given 784.77% strong returns in 3 years. It has given 99.54% positive returns in 5 years.

About - Ramkrishna Forgings Ltd. (RKF)

Ramkrishna Forgings (RKF) is a Kolkata-based forging company, incorporated in 1981. It has six manufacturing plants in India concentrated around Jamshedpur and Kolkata with installed capacity of 1,87,100 tonnes as on date. FY23 mix: Asia 60%, Europe 15%, North America 25%. FY23 segment mix: auto ~79% (CV space); non-auto ~21%.

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.