BackRR Kabel share price may see 15% upside: Prabhudas Lilladher initiates coverage with a Buy call
Prabhudas Lilladher initiated coverage on RR Kabel shares with a ‘Buy’ call and a target price of ₹1,407 per share, valuing at 35x FY25 earnings. The target price on RR Kabel shares implies an upside of nearly 20% upside from Thursday’s closing price.
PremiumThe latest stock market debutant RR Kabel received a rating boost from a domestic brokerage house soon after the listing. RR Kabel shares were listed on September 20 at a 14% premium to issue price. RR Kabel share price began trading at ₹1,179 on BSE and ₹1,180 on NSE as compared to the issue price of ₹1,035 per share.
The stock has been rising since listing and is up more than 15% from the issue price.
Brokerage firm Prabhudas Lilladher initiated coverage on RR Kabel shares with a ‘Buy’ call and a target price of ₹1,407 per share, valuing at 35x FY25 earnings. The target price on RR Kabel shares implies an upside of nearly 20% upside from Thursday’s closing price.
Praveen Sahay, Research Analyst at Prabhudas Lilladher Pvt Ltd believes that RR Kabel is a play on several opportunities in the Wires & Cables (W&C) segment given strong brand with diverse product portfolio, well-structured capacity expansion plans, increasing dealers /distribution network and distribution led export business.
Although the company has grown its FMEG portfolio inorganically, it expects to minimize losses in coming years by transitioning towards premium markets. In FMEG, too, the company has enhanced its brand presence, positioning and manufacturing capabilities to minimize losses.
RR Kabel is a fastest growing player in the Wires & Cables (W&C) segment with reported revenue CAGR of around 40% in W&C versus peers of 30% over FY21-23.
Robust growth can be attributed to its strong brand recognition, diverse product portfolio, high-quality manufacturing facilities, and wide distribution network.
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The company accounts for 74% revenue from B2C and maintained this at a higher level, being a wire heavy company. RR Kabel is doing ₹500 crore capex in next two years, aimed at augmenting its production capacity in both wire and cables.
The analyst expects the company’s W&C segment revenue CAGR at 22.3% over FY23-26E.
The company’s Revenue, EBITDA and PAT is estimated to grow at a CAGR of 20.7%, 38.8% and 44.3% over FY23-26E led by improving business mix, operating leverage & cost optimizing initiatives, investments in brand building and increasing distribution reach.
At 12:00 pm, RR Kabel shares were trading 0.32% higher at ₹1,182.90 apiece on the BSE.
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Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
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