'Buy' This Stock For +24% Returns In 6 Months: HDFC Securities

Brokerage firm HDFC Securities has recommended investors to buy stocks of Precision Camshafts Ltd. with a potential upside of 24.21%, within a target period of 6 months (2 quarters).

Target Price

The Current Market Price (CMP) of Precision Camshafts Ltd. is Rs. 135.25 The brokerage firm, HDFC Securities has estimated a Target Price for the stock at Rs. 168. Hence the stock is expected to give a 24.21% return, in a Target Period of 6 months.

Stock Outlook
Current Market Price (CMP)	Rs. 135.25
Target Price	Rs. 168
1 year returns	24.21%

Company performance

The company's consolidated revenue increased by 17% YoY to Rs. 215 crore driven by higher realization. EBITDA increased 56% YoY on account of lower raw material expenses, while EBITDA margins expanded ~340bps to 13.7%. The company reported a PAT of Rs. 20 crore, against Rs. 10 crore in Q2FY21. Precision Camshafts Ltd. reported that its revenue from European operation increased 11% YoY to Rs. 117 crore, while domestic revenue grew 37/22% YoY/QoQ to Rs. 70 crore.

Comments by HDFC Securities

According to HDFC Securities, "The performance of Precision Camshaft Ltd (PCL) was impacted over the last few years due to a global slowdown in the automobile industry which was further complicated by Covid related disruption. The global recovery in automobile demand and improving the performance of its subsidiary companies augur well for future growth."

About the company

The Precision Group is at the forefront of the automotive components business. The company has made strides towards participating in the EV opportunity by acquiring Emoss. The company offers high-end battery systems, fuel cells, range extenders, generators, power electronics, and control systems suitable for different industries. Acquisition of MFT, a specialist in machined components has resulted in broadening PCL's product portfolio and has given access to developed markets of Europe and North America.

Disclaimer

The above stock was picked from the brokerage report of HDFC Securities. 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.

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