Arihant Capital has given Buy recommendation for Hariom Pipe Industries with a target price of Rs. 403 in its research report issued on Aug 12, 2022
Arihant Capital’s research report on Hariom Pipe Industries
Hariom Pipe Industries Ltd (HPIL) reported strong numbers, Q1FY23 revenue grew by 63.9% YoY (+14.6% QoQ) to INR 142cr vs our estimates of INR 146cr. Gross profit stood at INR 39cr (+28.9% YoY/-2.6% QoQ) vs our estimates of INR 47cr. Margin contracted by 745 bps to 27.5% vs 34.9% in Q1FY22. The margin contraction mainly due to increase in raw material cost in terms of sales. The raw material cost in terms of sales stood at 72.5% vs 65.1% in Q1FY22. EBITDA stood at INR 16cr (+42.4% YoY/-6.7% QoQ) vs our estimates of INR 20cr. EBITDA Margin contracted by 170 bps to 11.2% vs 12.9% in Q1FY22. The employee cost and power & fuel cost reduced in terms of sales. The employee cost in terms of sales stood at 3.7% vs 5.2% in Q1FY22. The power cost in terms of sales stood at 11.5% vs 15.3% in Q1FY22. PAT stood at INR 9.6cr (+68.3% YoY/-1.5% QoQ), PAT Margin expanded by 18bps to 6.7% vs 6.5% in Q1FY22.
Outlook
We have a BUY rating at a TP of INR 403 per share; valued at EV/EBITDA multiple 4.6x and its FY24E EBITDA of INR 167cr; an upside of 75.2%.