Buy HEG, target price Rs 2800: ICICI Direct

ICICI Direct has buy call on HEG with a target price of Rs 2800. The current market price of HEG is Rs 2362.3. Time period given by analyst is one year when HEG Ltd. price can reach defined target.

HEG Ltd., incorporated in the year 1972, is a Mid Cap company (having a market cap of Rs 9128.22 Crore) operating in Industrial Consumables sector.

Financials
For the quarter ended 31-03-2021, the company reported a Consolidated Total Income of Rs 405.59 Crore, up 17.58 % from last quarter Total Income of Rs 344.94 Crore and down -2.67 % from last year same quarter Total Income of Rs 416.73 Crore. Company reported net profit after tax of Rs -6.80 Crore in latest quarter.

Investment Rationale
HEG’s capacity utilisation has sequentially improved from ~45% in Q1FY21 to ~85% in Q4FY21. Going forward, thebrokerage assumes capacity utilisation of 80% for FY22E and 82.5% for FY23E. It values the stock at 6.5x FY23E EV/EBITDA and arrive at a target price of Rs 2800. On the back of an improved industry outlook, the brokerage upgrades the stock from HOLD to BUY.

(Views and recommendations given in this section are the analysts' own and do not represent those of ETMarkets.com. Please consult your financial adviser before taking any position in the stock/s mentioned.)