UBS initiates buy on this smallcap auto components major; stock hits all-time high
UBS said earnings visibility also provides for earnings upgrades for Ramkrishna Forgings.
Ramkrishna Forgings shares in Tuesday's trade zoomed to a fresh all-time high after global brokerage UBS initiated its coverage on the stock with a target pegged at Rs 1,500. The set target implies an upside of around 46 per cent.
The brokerage believes the company by transitioning from pure forging company to total assembly solution provider, expands the product portfolio via diversification and moves up the value chain.
At the last count, shares of the auto company traded with gains of over 1 per cent at Rs 1,043.3 or Rs 13.55 per share on the BSE, while it hit a record high of Rs 1,064 apiece.
Last month, the company received a go-ahead from its board to set up an aluminium forging facility at Jamshedpur. The Board of Directors have also given an approval for an investment of Rs 57.5 crore to set up the facility, which will primarily cater to EV Market. The project will be set up with total installed capacity of 3,000 MT per annum and is expected to be commissioned by Q2 FY26. At the optimum capacity the project will generate additional revenue of Rs. 175 crore per annum for the company.
Upcoming capacity expansion, client additions, key order wins and recent acquisitions provide earnings visibility.
The brokerage stated that visible earnings drivers imply earnings upgrades. Further UBS added that the global market share remains in low single digits, implying a long growth runway. Also, it added that previous growth drivers remain relevant.
Think consensus does not factor in RK Forgings' capability or potential growth drivers, it added.
RK Forgings share price
The stock in the past one year has gained over 55 per cent, while in week's time it has moved higher by over 15 per cent.
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