Stock to Buy: Graphite India Target Price 440
Stock to Buy: Graphite India
ICICI Direct, a domestic brokerage firm, has assigned a ‘BUY’ rating to Graphite India and set a target price of Rs 440 for its shares. As of Friday, June 9, Graphite India’s shares closed at Rs 376 on the National Stock Exchange (NSE).
According to ICICI Direct, Graphite India’s consolidated capacity utilization in the fourth quarter was recorded at 55%.
This figure represents a decline compared to the 76% utilization in the same quarter of the previous year and the 42% utilization in the December quarter. The capacity utilization also fell short of the brokerage firm’s estimate of 60%.
However, despite the lower capacity utilization, Graphite India’s consolidated revenue witnessed a year-on-year growth of 16%, reaching Rs 815 crore. This growth outperformed ICICI Direct’s revenue estimate of Rs 729 crore.
Based on these factors, ICICI Direct has expressed confidence in the future performance of Graphite India and has recommended investors to consider buying the company’s shares. The brokerage firm has set a target price of Rs 440, suggesting potential upside for the stock.
During the fourth quarter, Graphite India’s consolidated operating profit (EBITDA) amounted to Rs 62 crore. This figure represented a 30% decline compared to the same quarter of the previous year and a 14% decline compared to the previous quarter.
Additionally, the company’s EBITDA margin for the March quarter stood at 7.6%, reflecting a decrease from 10.4% in the corresponding quarter of the previous fiscal year and 10.3% in the preceding quarter.
Graphite India’s total income from other sources experienced a significant decline in the fourth quarter, registering a year-on-year decrease of 93% and a quarter-on-quarter decrease of 85%. ICICI Direct had previously estimated this income to be Rs 45 crore.
Furthermore, the company’s net profit for the fourth quarter amounted to Rs 29 crore, indicating a substantial decline of 69% year-on-year and 45% sequentially.
These financial figures highlight the challenges and fluctuations faced by Graphite India during the specified period. Factors such as lower operating profit, reduced EBITDA margin, and a decline in income from other sources contributed to the decrease in net profit.
According to the brokerage, Graphite India’s shares have delivered impressive returns over the last three years. During this period, the stock has yielded nearly 82% returns for investors.
In May 2020, the shares were trading at Rs 206, and as of now, they have appreciated to Rs 376, reflecting a significant increase in value.
This substantial growth in Graphite India’s share price demonstrates the positive trajectory and market performance of the company.
The brokerage has maintained its BUY rating on the stock, indicating its confidence in the future prospects and potential further appreciation of the shares.
Investors who have held Graphite India shares over the last three years have benefited from the significant price appreciation.
However, it’s important to note that past performance is not indicative of future returns, and the stock market is subject to fluctuations and risks. Investors should carefully assess their investment goals, risk tolerance, and conduct thorough research before making any investment decisions.
The brokerage’s continued BUY rating on Graphite India suggests that they anticipate further potential growth and believe that the stock may offer attractive investment opportunities.
As always, it is recommended for investors to consider their own financial circumstances and consult with certified experts or financial advisors before making any investment decisions.
About Graphite India
Graphite India is a prominent player in the graphite electrode manufacturing industry and holds the distinction of being the largest manufacturer of graphite electrodes in the country.
The company possesses a production capacity of 98,000 tonnes per annum, enabling it to meet the growing demand for graphite electrodes in various industries.
Graphite India’s product portfolio encompasses a wide range of graphite electrodes, catering to diverse customer requirements. However, the company places particular emphasis on the production of large diameter ultra-high power (UHP) electrodes.
These UHP electrodes offer superior performance characteristics and find extensive application in industries such as steelmaking, electric arc furnaces, and other high-temperature processes.
The focus on manufacturing large diameter UHP electrodes aligns with Graphite India’s strategy to target products with higher margins.
By catering to the demand for premium-grade electrodes, the company aims to enhance its profitability and strengthen its competitive position in the market.
With over 40 years of technical expertise in the graphite electrode industry, Graphite India has amassed valuable knowledge and experience.
This extensive experience enables the company to produce high-quality electrodes, innovate in electrode manufacturing processes, and effectively address customer needs.
Graphite India’s stature as the largest graphite electrode manufacturer in India, its production capacity, and its emphasis on high-margin products reflect the company’s position as a key player in the graphite electrode industry.
Through its technical expertise and commitment to product quality, Graphite India continues to contribute to the growth and development of various industries reliant on graphite electrodes.
Disclaimer: The information provided regarding stock performance is solely based on historical data and should not be considered as investment advice.
It is crucial to note that investing in the market carries inherent risks, and individuals should exercise caution and conduct thorough research before making any investment decisions.
It is highly recommended to seek the guidance of certified financial experts or advisors who can provide personalized advice based on individual circumstances. We do not endorse or advise anyone to invest money in the market.
