Buy This Multibagger PSU-Miniratna Metal Stock, Target Price Rs 285: ICICI Direct

Brokerage Firm ICICI Direct upgrades its rating on Mishra Dhatu Nigam Limited (Midhani) from "hold" to "Buy". The brokerage sees a decent gain of up to 16% in 12 months with a target price of Rs. 285/share. Midhani is a leading manufacturer of special steel, super alloys and titanium alloys catering to niche end-user segments like space, defence, etc. Within the overall steel market, Midhani's area of focus is specialty steel. Midhani's product range includes super alloys, titanium and titanium alloys, special purpose steels and other special alloys. Midhani is a small-cap Metal sector company with a market capitalization of Rs 4,619.04 crore.

Current Market Price, 52-week low & high, and Returns

The Midhani stock last traded at Rs 246.55/share on NSE, gaining 1.82% as compared to the previous close. The current market price is trading 8.31% down from its 52-week high. Its 52 week high is Rs 268.90, recorded on 9 November 2022 and the 52 week low is Rs 155.55, recorded on 20 June 2022, respectively.

Since its listing on 4 April 2022 on Stock Exchange, the shares have given 173.79% multibagger returns. The stock in 3 months has given 17.38% positive returns. Over a year, it has given 31.38% positive returns. Whereas, in the past 3 years has given 60.62% positive returns.

Key Highlights

• The wide plate mill of Midhani is currently under trial runs. Revenue from wide plate mill is expected to improve in coming quarters. Once the wide plate mill is fully ramped up, it is expected to generate revenue to the tune of ~Rs 500 crore. The Rs 500 crore annual revenue run rate from the wide plate mill is expected to be reached in FY24E once the entire product range is established.
• Midhani is targeting a topline of ~ Rs 1000 crore for FY23.
• The company is currently seeing good potential from the space segment.
• Of the order book position of ~Rs 1501 crore as on 1st Oct 2022, ~55% is from Defence, ~35% from space and balance ~10% is from others.

Buy Mishra Dhatu Nigam stock for target price of Rs 285/share

Midhani has given a return of ~32% in the last one year (from ~Rs 186 in December 2021 to ~Rs 246 levels in December 2022). "Aided by a healthy demand environment from both defence and space segment, we expect a healthy pick-up in the topline, going forward. Hence, we upgrade the stock from HOLD to BUY. We value Midhani at Rs 285, 22x FY24E EPS," the brokerage has said.

Key triggers for future price performance

• As on October 1, 2022, Midhani's order book was at Rs 1501 crore compared to Rs 1359 crore as on July 1, 2022. In terms of order book break-up, ~55% is from the defence segment, ~35% is from the space segment while balance ~10% is from others.
• Over FY22-24E, we expect the consolidated topline to grow at 18.8% CAGR while EBITDA and PAT are expected to grow at a CAGR of 16.8% and 17.3%, respectively.

Disclaimer

The stock has been picked from the brokerage report of ICICI Direct. 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 check with certified experts before making any investment decision.