Sharekhan Maintains "Buy" On Midcap Metal Stock Amid Stellar Q3 Results, Sees 15% Upside

Sharekhan has a "Buy" on Ratnamani Metals & Tubes Ltd. (RMTL) with a target price of Rs 2,500 apiece. The stock is likely to give a decent positive return of up to 15% if purchased at the current market price. According to the brokerage, Q3FY23 results were strong, led by better-than-expected revenue growth of 19% y-o-y and 192 bps beat in OPM at 18.1% (up 403 bps y-o-y). Operating profit/PAT of Rs. 199 crore/Rs. 134 crore, up 52%/51% was 17%/17% above our estimates.

Stock Performance and Returns Over the Past 5 Years

The stock of RMTL last traded at Rs 2,192 apiece. It recorded its 52 week low on 6 May 2022 at Rs 1,408.13 apiece and 52 week high on 6 February 2022 at Rs 2,437 apiece, respectively.
The stock gained 2.07% in 1 week. It gained 3.87% in 1 month, and 14.28% in 3 months, respectively. It gave 49.54% positive return in 1 year. In 3 years it gave 154.96% positive return. In 5 years it gave a multibagger return of 270.67%.

Sharekhan Maintain "Buy" on the stock with a revised PT of Rs. 2,500/share

According to the brokerage, RMTL is well-positioned to benefit from a potential rise in order intake, especially from high-margin SS pipes and geopolitical tensions between Russia-Ukraine could open new growth opportunities from Europe.

"We expect RMTL to clock superior earnings CAGR of 25% over FY22- 25E and improvement in RoE/ROCE to 18%/23%. Hence, we maintain a Buy rating on RMTL with a revised PT of Rs. 2,500 (reflects rollover of PE multiple to FY25E EPS). The stock trades at 27.6x/23.3x its FY24E/FY25E EPS," the brokerage has said.

Key Risks

According to Sharekhan, the key risks to "buy" call are as follows:

• Soft demand or delay in plant commissioning might affect revenue growth momentum.
• Inability to undertake adequate and timely price hikes to mitigate the volatility in input costs might affect margins.

Disclaimer

The stock has been picked from the brokerage report of Sharekhan. 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.