Nuvama Suggests "Buy" This Small Cap Building Material Sector Stock For 57% Gains

Leading brokerage firm Nuvama picks the stock of Hindware Home Innovation Ltd. with a "Buy" call in its recent report. It claims a robust upside of up to 57% with the given target price of Rs 54/share. The stock operates in the building material sector. It is a small-cap stock having a market capitalisation of Rs 2,517 crore.

Stock Outlook & Performance

The current market price of the Hindware Home Innovation is Rs 348.15/share, down 2.03% from the previous close. It recorded 52 week high on 12 January 2023 at Rs 482/share and 52 week low on 20 June 2022 at Rs 263/share, respectively.

The stock gained 5.07% in 1 week. It fell 5.21% in 1 month and 24.29% in 3 months, respectively. It fell 5.02% in 1 year. It gained 514..02% in the past 3 years. Since its listing, on 26 December 2019, it has given 115.57% positive return.

Valuation and view - Buy for Rs 546/share target price

Nuvama said, "We initiate coverage with a 'BUY' rating, given its leading position in sanitaryware and faucets, wide product basket, and strong brand presence. We expect 18%/30% revenue/PAT CAGR over FY22-25 (versus 11%/22% CAGR over FY19-22) driven by market share gains and EBITDA margin expansion (391bps to 11.5% in FY25E), owing to a superior product mix and benefits of scale."

It added, "Valuing the stock at 18x FY25E earnings, we arrive at our TP of INR 546, an upside of 57% from its CMP. As we await market share and margin expansion execution, the assigned multiple is conservative compared to segment peers. A slowdown in the economy and the housing market, and higher input costs are the key risks to our thesis."

Disclaimer - The stock has been picked from the brokerage report of Nuvama. 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.