Motilal Oswal Recommends Buy This Largecap Stock With A Rs. 2,230 Target Price

Brokerage firm Motilal Oswal suggests buying the stocks of Tube Investments. The company's dividend payout stood ~14.5% of standalone PAT, or ~7% of consolidated PAT. Additionally, ts consolidated revenue/EBITDA/adjusted PAT grew 106%/126%/206% in FY22, driven by a full-year consolidation and a sharp turnaround in CGPOWER, according to the report.

Stock To Buy: Target Price, Current Market Price

The Current Market Price (CMP) of Tube Investments is Rs. 1,997. Motilal Oswal has estimated a Target Price for the stock at Rs. 2,230. This stock has the potential to give 12% return, in the upcoming 1 year. This is a large-cap stock with a market capitalization of around Rs. 43,688 crore.

 

Stock Outlook
Current Market Price (CMP)	Rs. 1,997
Target Price	Rs. 2,230
Potential 1 year return	12.00%
52 week high share price	Rs. 2,319.00
52 week low share price	Rs. 1,081.05

The company plans launches in e-mobility in FY23, forays into new businesses TIINDIA's FY22 annual report highlightsnthe progress made in the core business, particularly in exports, capability improvements in the core business, strategy on e-mobility, and its plans to foray into Medical Devices and Electronics under its TI-2 strategy. The management's focus is on deliverance of four metrics - revenue growth (up 106% YoY in FY22), profitability (up 100bp in EBITDA margin), RoIC (up 22.3pp to 42.7%), and FCF.

Stock advantages and risks: Motilal Oswal

"TIINDIA offers diversified revenue streams, with strong growth in its core business (~25% CAGR), ramp-up in CGPOWER, and optionality of new businesses incubated under the TI-2 strategy. At the consolidated level, we estimate a revenue/EBITDA/PAT CAGR of ~16%/21%/22% over FY22-25 on a high base of FY22, where CGPOWER delivered a robust performance. We expect consolidated RoCE to improve by 560bp to 38% by FY25. We are not building in any benefit from new ventures under TI-2 (except the Lens business, which is part of others) in our consolidated performance. Based on our DCF-based estimates, we see potential value of ~Rs. 87 per share from the e-3W and Tractor business. The stock trades at 33.2x/26.5x FY23E/FY24E consolidated EPS. We maintain our Buy rating based on 30x for the standalone business and valuing listed subsidiaries at a 20% holding company discount." commenting on the stock's advantages, said the firm.

Company profile:

Tube Investments is a supplier of precision tubes, Electric Resistance Welded (ERW) and Cold Drawn Welded (CDW), to major automotive companies in India and abroad. TPI is India's undisputed market leader in CDW tubes for the Automotive industry. The company plans launches in e-mobility in FY23, forays into new businesses TIINDIA's FY22 annual report highlightsnthe progress made in the core business, particularly in exports, capability improvements in the core business, strategy on e-mobility, and its plans to foray into Medical Devices and Electronics under its TI-2 strategy. The management's focus is on deliverance of four metrics - revenue growth (up 106% YoY in FY22), profitability (up 100bp in EBITDA margin), RoIC (up 22.3pp to 42.7%), and FCF. It plans to launch electric 3Ws (2QFY23) and Tractors in FY23. It has set up an e#3W plant in Chennai. TIINDIA has decided to foray into Medical Devices and Electronics in the near future.

Disclaimer

The above stock was picked from the brokerage report of Motilal Oswal. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.