After 20% rise in a month, this Kacholia stock can rally up to 55%! Here’s why

New Delhi: La Opala RG, the glass products maker, has been on a roll lately. The stock has rallied as much as 20 per cent in the last one month. The stock is up a dozen percentage points since announcements of Q1 results on August 13, 2022.

Most brokerage firms remain bullish on the counter and see an up to 55 per cent rally in the counter, citing its sound fundamentals and growth prospects in the near future. Even seasoned D-Street investors hold his stock in their portfolio.

Brokerage firm Monarch Networth Capital said that the company continues to report a strong set up of numbers with a topline of growth of over 155 per cent on a yearly basis which represents a CAGR growth of over 12 per cent over FY20.

The brokerage has maintained its buy call on the stock but has revised its target price to Rs 516 from Rs 488 earlier, hunting for a 54.5 percent upside in the counter.

This surge is evident from our recent channel checks that indicate that the product has been steadily taking market share away from bone china, steel, it added. "The structural shift to opalware is likely to get more pronounced."

The company is planning to expand its capacity and is likely to gain incremental market share. Furthermore, the company’s likely expansion into Borosilicate glass provides a further avenue of growth.

Another domestic broker, Centrum Broking, also remains bullish on La Opala’s secular growth story. "Balance sheet continues to remain debt with liquid investment and cash of Rs 360 crore at end of FY22," it said

"Significant capacity addition, venturing into new product categories, favorable consumer demand is expected to provide the growth impetus to the company over next three years," it added with a buy rating, but trimmed its target price to Rs 442 from Rs 476 earlier.

La Opala RG reported a 127 per cent rise in the net profit to Rs 20.08 crore for the June 2022 quarter, from a net profit of Rs 8.86 crore in the same period previous year.

Its operational income grew by 155 per cent to Rs 82.15 crore for the three month ended June 30, 2022. The company had reported an income of Rs 32.15 crore in the year ago period.

In its report launched last month, Nirmal Bang Institutional Equities said that the company has an edge in Borosilicate despite being a late entrant as it will be the only producer in India, whereas the remaining players import in India paying 10 per cent duty.

"We understand that the margin profile of Borosilicate should be better than Opalware. Future opalware expansion would be brownfield in nature," it added, taking into account its earnings visibility, market positioning, healthy balance sheet and future expansion plans.

Incorporated in 1987, La Opala RG is a manufacturer and marketer of lifestyle products in the tableware segment. It has spread the wings beyond the domestic arena and ventured into the leading market of the world.

The Kolkata-based company has a wide network of dealers and retailers and a large marketing field force. It is the second-largest crockery manufacturer in the country.

According to the latest shareholding data, seasoned investor Ashish Kacholia held 15,79,933 equity shares or 1.42 per cent stake in the company as of June 30, 2022.

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