ICICI Direct has given Buy recommendation for Graphite India with a target price of Rs. 825 in its research report issued on Apr 08, 2021
ICICI Direct’s research report on Graphite India
Over the last few months there has been a healthy uptick in global steel prices as well as global steel production levels. We believe graphite electrode players will be a key beneficiary of the current upcycle in steel. Even during the first couple months of CY21, global crude steel production witnessed steady growth, auguring well for graphite electrode majors. During January-February 2021, global steel production was at 315 million tonnes (MT), up 6.6% YoY. In addition to higher global steel output, steel prices have witnessed healthy strength. Both above-mentioned factors i.e. higher global steel output and strength in global steel prices has put graphite India in a sweet spot.
We value the stock at 6x FY23E EV/EBITDA and arrive at a target price of Rs 825 (earlier Rs 500). We upgrade the stock from HOLD to BUY.