Buy Globus Spirits, target price Rs 1761: HDFC Securities

HDFC Securities has buy call on Globus Spirits with a target price of Rs 1761. The current market price of Globus Spirits Ltd. is Rs 1440.2.

Time period given by analyst is six months when Globus Spirits Ltd. price can reach defined target.

Globus Spirits Ltd., incorporated in the year 1993, is a Small Cap company (having a market cap of Rs 4209.45 Crore) operating in Beverages - Alcoholic sector.

Globus Spirits Ltd. key Products/Revenue Segments include Alcohol (Industrial), Other Services and Duty Drawback for the year ending 31-Mar-2021.


Financials
For the quarter ended 30-06-2021, the company reported a Consolidated Total Income of Rs 371.60 Crore, up 3.80 % from last quarter Total Income of Rs 357.99 Crore and up 60.89 % from last year same quarter Total Income of Rs 230.96 Crore. Company reported net profit after tax of Rs 55.67 Crore in latest quarter.

Investment Rationale
Though the stock has rallied ~4x over past 6 months, the brokerage believes there’s still upside to this rally, with the caveat that the Government maintains its supportive stance on ethanol blending. The brokerage thinks the base case fair value of the stock is Rs 1,619 (17x Sept’23E EPS) and the bull case fair value of is Rs 1,761 (18.5x Sept’23E E EPS). Investors can buy the in stock Rs 1,454-1,482 band (15.5x Sept’23E EPS) and add more on dips to Rs 1,273-1,297 band (13.5x Sept’23E EPS). At LTP of Rs 1,469, it quotes at 15.4x Sept’23E EPS.

Promoter/FII Holdings
Promoters held 55.96 per cent stake in the company as of 30-Jun-2021, while FIIs owned 1.47 per cent, DIIs 0.94 per cent.