Buy Vardhman Special Steels, target price Rs 300: ICICI Direct

ICICI Direct has buy call on Vardhman Special Steels with a target price of Rs 300. The current market price of Vardhman Special Steels is Rs 257.9. Time period given by analyst is one year when Vardhman Special Steels Ltd. price can reach defined target.

Vardhman Special Steels Ltd., incorporated in the year 2010, is a Small Cap company (having a market cap of Rs 1050.55 Crore) operating in Metals - Ferrous sector.

Financials
For the quarter ended 31-03-2021, the company reported a Standalone Total Income of Rs 336.89 Crore, up 15.83 % from last quarter Total Income of Rs 290.84 Crore and up 62.65 % from last year same quarter Total Income of Rs 207.12 Crore. Company reported net profit after tax of Rs 26.36 Crore in latest quarter.


Investment Rationale
VSSL is currently in a sweet spot on the back of a) recent price hike received from OEMs, b) receipt of the long-awaited environmental clearance (EC), which has cleared the pathway for expansion plans, c) good demand from the user industry segment. On the back of healthy operating environment, the brokerage remain positive on the stock. On the back of recent price hike received by the company from OEMs, the brokerage revises estimates both for FY22E and FY23E. It values the stock at 7.5x FY23E EV/EBITDA and arrive at a target price of Rs 300 (earlier Rs 240).