Sharekhan has given Buy recommendation for Honeywell Automation India with a target price of Rs. 49,750 in its research report issued on Aug 16, 2022
Sharekhan’s research report on Honeywell Automation India
Q1FY23 performance beat our expectations on all fronts. Revenue rose by ~15% y-o-y to Rs 786 crore (versus our estimate of Rs 744 crore). Operating profit growth was restricted to ~5% y-o-y to Rs 122 crore due to high input cost despite proportionate decline in staff cost and other expenses, Consequently, OPM declined by 157 bps y-o-y to 15.5% (versus our estimate of 14.5%). Net profit was up by 11% y-o-y to ~Rs. 102 crore (versus our estimate of Rs 87 crore). Supply chain disruptions faced by the industry especially for semi-conductor chip and electronics components are easing out. We believe this shall boost company’s revenue and earnings growth going forward.
We retain a Buy rating on the stock with a revised PT of Rs. 49,750 as improving growth prospects across end user industries, asset light business model, strong parentage, healthy balance sheet with cash & bank balance of Rs 2,006 crore (as on FY22) justify stock’s premium valuation.