Ashish Kacholia Stocks: ICICI Direct sees up to 37% upside in Ador Welding shares; lists these triggers

Ashish Kacholia Stocks: Ace investor Ashish Kacholia-backed industrial manufacturing company – Ador Welding shares have the potential to grow over 37 per cent amid strong growth and profitability outlook, a domestic brokerage firm ICICI Direct Research said in its report. 

Ashish Kacholia, who is fondly referred to as a 'Big Whale' of the Indian stock market, holds 437,700 equity shares, which translates into 3.2 per cent stakes in Ador Welding, as per the latest shareholding pattern of the company available on the BSE. 

Going forward, better consumables volumes, rebound in equipment sales, and projects business turnaround to drive growth, and profitability in Ador Welding, ICICI Direct said. Considering strong growth outlook, and margin revival, it maintains a Buy rating with target price of Rs 890 per share. 

The company reported decent Q4FY22 results with revenues came in at Rs 199.8 crore, up 23.6% YoY, 14.6% QoQ; EBITDA at Rs 17.7 crore up 13.3% YoY, aided by reduced losses in flares and process equipment business, while adjusted PAT was at Rs 12 crore, up 20.8% YoY. 

The brokerage said that Ador Welding is expected to continue strong RoCE, positive free cash flow trajectory in consumables in comings years despite a challenging environment and aims to reduce legacy costs in projects business to improve return ratios. 

The company aims to focus on the core welding business, and reduce legacy costs while streamlining projects business to regain growth and improve profitability, ICICI Direct said expecting a revenue CAGR of 13.5% in FY22-24E with margins rebounding to 11% levels of the company. 

Ador Welding is a leading player in the welding consumables with around 19 per cent market share, welding equipment, automation, and projects business. Welding consumables contributed almost 81 per cent of revenue in FY22. 

The stock on Wednesday mostly traded flat with a negative bias at Rs 649 per share on the BSE as compared to a 0.06 per cent fall in the S&P BSE Sensex at around 02:31 PM.