Thus far in the calendar year 2023 (CY23), the stock has zoomed 53 per cent on the expectation of a sustained healthy performance in the current and coming fiscals, supported by a steady volume growth. At 02:32 pm; the S&P BSE Sensex was down 0.06 per cent at 60,355. Since December 2022, the benchmark index has fallen 1.4 per cent.
After a robust 39 per cent year-on-year (YoY) growth in revenues in FY22 on the back of a surge in realisations, increased volumes and higher share of value-added products, the company’s performance continued to be healthy in April to December for the financial year 2022-23 (9MFY2023) as it reported an 8 per cent YoY growth in revenues. The financial performance during the period was aided by stable input costs, festive season and continuous improvement in the product mix.
Together with steady profit margins, this is expected to help the company maintain healthy coverage metrics, despite working capital intensive nature of operations, according to rating agency ICRA. The steps being taken by the company to streamline its working capital cycle are favourably contributing to its cash flow generation and have enabled the company to prepay its debt obligations, facilitating faster deleveraging of its balance sheet, ICRA said in a rationale.
Meanwhile, analysts at Anand Rathi Shares and Stock Brokers initiated coverage on Surya Roshni with a “BUY” rating, valuing the company based on 12.5x of FY24E earnings (average P/E of last 5 year) with a target price of Rs 860.
“Despite Covid-19 pandemic, the company’s EBITDA margin remained intact at 7 per cent, which depicts its operational efficiency and command over its pricing power. Also, Surya is the largest GI pipe manufacturer in India and second largest player in lighting with a robust track record. We forecast its EPS to grow at CAGR of 27 per cent over FY22-24E and ROE to improve to 15 per cent in FY24 (average 10 per cent over FY16-FY22). Going ahead, we expect the company to continue its strong growth trajectory with its Revenue/EBITDA/PAT growing at a CAGR of 10 per cent/21 per cent/35 per cent respectively over FY22 to FY24E with continuous improvement in margins and return ratios,” the brokerage said in a report.