This Multibagger Stock Has A “BUY” Call From ICICI Direct Having 146% YTD Return

Key triggers for future price performance of Grindwell Norton according to ICICI Direct

• Ambition to maintain market share in abrasives and increase market share in ceramic & plastics with gradual penetration of new value-added products.
• High margin value-added products and solutions-oriented approach to drive margin expansion (from ~16.7% in FY20 to 20.5% in FY24E).
• We expect revenue, EBITDA to grow at a CAGR of 16.3%, 17.8%, respectively, in FY21-24E.
• Net debt-free b/s, double-digit return ratios & strong cash generation.

Buy Grindwell Norton with a target price of Rs 1970

Based on the Q2FY22 results the company has generated a revenue of Rs 512.7 crore, up 16.8% YoY crossing normal levels, EBITDA in Q2FY22 came in at Rs 101.1 crore, up 8% YoY with margins at 19.7% impacted by lower gross margins and PAT grew 10.6% to Rs 71.1 crore, YoY, according to the research report of ICICI Direct.

The brokerage says “Grindwell Norton (GNL) is the market leader in the India abrasive market with ~26% market share. The segments include abrasives (contributing ~57%), ceramics & plastics (33%) and IT services & others (10%). It has consistently operated with high (>16%) margins & return ratios.”

“Going forward, accelerated growth in performance plastics & ceramics and exports are expected to drive long-term incremental growth. Considering a strong growth outlook, margins, we maintain a BUY rating. We value GNL at Rs 1970 i.e. 54x P/E on FY24E EPS” said ICICI Direct in its research report.

Disclaimer

The above stock is picked from the brokerage report of ICICI Direct. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.