Recommendations from Auto Ancillaries and Power Transmission Sectors
The scrips in this column have been recommended with a 15-day investment horizon in mind and carry high risk. Therefore, investors are advised to take into account their risk appetite before investing, as fundamentals may or may not back the recommendations.
GABRIEL INDIA LTD.
CMP - ₹133.05
BSE CODE 505714
Volume 1,72,122
Face Value ₹1
Target ₹140-145
Stoploss ₹122 (CLS)
Gabriel India started its operations in 1961 from its factory in Mulund, Mumbai. The company has the widest range of ride control products in India and enjoys a leadership position in the market. It has a strong presence as a producer and supplier of high-quality ride control products for the Indian automotive industry participating in all segments i.e. passenger cars, utility vehicles, commercial vehicles and two-wheelers. The company’s net sales for Q4FY22 stood at ₹684.33 crore as opposed to ₹578.29 crore in Q4FY21, a marginal increase of 18.34 per cent. The operating profit was on the slightly lower side at ₹48.55 crore in Q4FY22, as compared to the operating profit of ₹55.51 crore in Q4FY21, lower by 12.54 per cent. Net profit reduced as well in Q4FY22 and was reported at ₹26.92 crore, lower by 6.72 per cent as compared to ₹28.85 crore reported in Q4FY21. Strong demand and improving market share across business segments, new product launches, entry into newer export markets and constructive developments in the electric vehicle business will act as key levers for the company’s long-term growth. Hence, we recommend BUY.
KEC INTERNATIONAL LTD.
CMP - ₹415.05
BSE CODE 532714
Volume 30,110
Face Value ₹2
Target ₹440-450
Stoploss ₹400(CLS)
KEC International Limited, headquartered in Mumbai, is the flagship company of the RPG Group. An engineering, procurement and construction (EPC) major, the company delivers projects in key infrastructure sectors such as power transmission and distribution, railways, civil, urban infrastructure, solar, smart infrastructure and cables. Focusing on the quarterly performance of the company, it recorded net sales of ₹4,274.78 crore in Q4FY22, a 1.97 per cent reduction from ₹4,360.54 crore in Q4FY21. Operating profit in Q4FY22 stood at ₹255.07 crore as compared to ₹366.88 crore in Q4FY21, a decrease of 30.48 per cent. The net profit reduced was recorded at ₹112.04 crore in Q4FY22 vis-à-vis net profit at ₹194.30 crore in Q4FY21, a drop of 42.34 per cent. The company has impressive execution capability and a well-diversified robust order book which will help the margins improve. The non-transmission and distribution business and railway, cable and civil business will be the growth drivers going forward. Hence, we recommend, BUY.
(Closing price as of June 28, 2022)