Hello Sir,

Hope you are doing well.

On 29th Sep’23, Friday evening, we released our new stock recommendation for our Alpha and Alpha + Members.

The management has introduced a new product line wherein they are targeting 600 crore + sales in FY 26 with EBITDA margins of 20-22%

If the management is able to achieve the above numbers, the company will mostly likely double its profit over the next 3-4 years.

Here are some other interesting details about the company:

  • 30 years + old company and among the top 2 in its line of business
  • Growth – Over the last 2 years the company has grown its sales by ~60% and PAT by ~50%
  • Product diversification – The company has just added a new product line, and this could help it potentially double its profit in the next 3-4 years
  • Capacity expansion – The company has spent Rs 500 crore + on adding a new product line. Further, in its existing product line, it has expanded capacity by 39% since Jun’22
  • Margin expansion – The company has taken a few price hikes and can benefit from operating leverage as the volume growth is expected to be in double digits
  • Expected reduction in debt – Recently, the company took some debt to set up the new product line. We believe, the debt may start reducing FY 25 onwards with strong cash flows
  • Promoter’s skin in the game – Promoter’s hold more than 50% stake in the company and since Mar’19 their holding in the company has increased by more than 100 basis points
  • Valuations – We do not like overpaying for a stock. Currently the stock is available around 1.1 times sales against the median value of 1.4 and on the higher end it also trades around 2.4 times sales

You can get this new recommendation along with other recommendations, by subscribing HERE

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Best Regards,

Ekansh Mittal
Research Analyst
Web: https://www.katalystwealth.com/

 

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Name: Ekansh Mittal     Email Id: [email protected]    Ph: +91 727 5050062

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The views expressed are based solely on information available publicly and believed to be true. Investors are advised to independently evaluate the market conditions/risks involved before making any investment decision

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