Lighting Stock Skyrockets 50% In Six Months, Analyst Forecasts Further 20% Upside

Brokerage firm Anand Rathi Investment Services initiated coverage for Surya Roshni Limited on Monday, April 10, as it expects the company “to continue its strong growth trajectory.”

The Surya Roshni AnalystKuber Chauhan for Anand Rathi Investment Services assigned a ‘buy’ rating to the stock with a price target of ₹860- around 20% upside from the stock’s last closing price of ₹713.

The Surya Roshni Thesis: The brokerage firm in its research note, highlighted that the company is the
largest GI pipe manufacturer in India and the second-largest player in the lighting space. Due to its leadership position in both segments, the company has a strong network of dealers/distributors and retailers spread across the country. As per the brokerage firm, the company also has strategically placed manufacturing plants in Madhya Pradesh, Andhra Pradesh, Haryana, and Gujarat to meet supplies in different parts of the country.

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The firm highlighted that the company’s diversified offerings give it a competitive edge among its peers to offset volatility in raw material prices and pass on inflationary pressure to B2B and B2C customers. The analyst also highlighted that the company has maintained an EBITDA margin in the range of 6-7% over the last five years.

The research note also shed light on the company’s export business stating that the company has a presence across several countries in the Middle East and it is further making gradual efforts to tap across Australia, Singapore, South East Asia, and the UK.

The analyst also highlighted the key risks for the company, the first being a correction in steel prices that would mean inventory losses for the company affecting margins. The second is import threats from China, “Chinese companies are cost-competitive compared to Indian companies. Hence, the threat of imports for China will continue to persist,” the brokerage firm added in its research note.

On the bourses, Surya Roshni’s share price has been on the up for quite some time now. Shares of the company are up around 10% in the last five sessions. In the last six months, Surya Roshni’s share price has climbed up over 50%.

Price Action: Surya Roshni share price was up 1.70% to trade at ₹725.15 in the late hours of trading on Monday.

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Posted In: Analyst ColorAnalyst RatingsAnand Rathi Investment ServicesSurya Roshni