Buy Alicon Castalloy, target price Rs 995: HDFC Securities

HDFC Securities has buy call on Alicon Castalloy with a target price of Rs 995. The current market price of Alicon Castalloy Ltd. is Rs 814.

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

Alicon Castalloy Ltd., incorporated in the year 1990, is a Small Cap company (having a market cap of Rs 1311.50 Crore) operating in Auto Ancillaries sector.

Alicon Castalloy Ltd. key Products/Revenue Segments include Aluminium Alloys, Scrap, Dies and Export Incentives for the year ending 31-Mar-2021.


Financials
For the quarter ended 30-09-2021, the company reported a Consolidated Total Income of Rs 268.73 Crore, up 26.95 % from last quarter Total Income of Rs 211.68 Crore and up 30.99 % from last year same quarter Total Income of Rs 205.15 Crore. Company reported net profit after tax of Rs 3.02 Crore in latest quarter.


Investment Rationale
The brokerage expects ACL’s business to turn around in FY22E supported by strong order wins over the last 4-6 quarters and build on the momentum over the next two years. Revenue/EBITDA of the company is expected to grow at CAGR of 22/31% over FY21 to FY24E and PAT as the company ramps up the production of recent order wins. The brokerage believes investors can buy the stock in the band of Rs 825-840 and add on dips to Rs 735-750 band (14.5x Dec-23E EPS) for a base case fair value of Rs 920 (18x Dec-23E EPS) and bull case fair value is Rs 995 (19.5x Dec- 23E EPS) in the next two quarters.

Promoter/FII Holdings
Promoters held 55.71 per cent stake in the company as of 30-Sep-2021, while FIIs owned 0.0 per cent, DIIs 9.45 per cent.