60% Dividend, 1:1 Bonus Shares: Sharekhan Places Buy On Small Cap Stock, Hits Upper Circuit

Broking firm Sharekhan initiates a Buy on GNA Axles Ltd. with a target price of Rs 1095 apiece. The brokerage claims 11% potential upside from its current market price. The stock is set to trade 1:1 ex-Bonus & 60% ex-dividend on the revised Record Date as Saturday, Sept 02, 2023.

The Board of Directors of the company recommended a dividend of 60% i.e. Rs 6/- per equity share of Rs 10/- each for the financial year ended March 31, 2023, and Recommended Issue of Bonus Shares in the ratio of 1:1, i.e. 1 Equity Share of Rs. 10/- each for every 1 Equity Share of Rs. 10/- each.

Valuation - Maintain Buy with an revised PT of Rs. 1,095

According to Sharekhan, With healthy gross margin expansion, GNA beat our EBITDA margin expectations in Q1FY24 and reported PAT ahead of estimates. The EBITDA margin expansion on y-o-y basis was on expected lines, however EBITDA Margin expansion on q-o-q basis, surprised positively.

"We believe that the company is passing on corrections in input costs (including freight cost) to customers and hence revenue remains flat in tandem, while it is sustaining desired levels of profitability. In light of a high base and macro issues in overseas market the company was recently looking for a 8-9% revenue growth in FY24 and aiming to sustain EBITDA Margin in the range of 14.5-15%, which in our view is realistic," the brokerage has said.

It added, "Given the diversified geography mix and strong clientele, we believe GNA is well positioned to sustain its revenue at higher levels. After Q1FY24 performance, we retain our earnings estimates. We built up a 8.0% revenue CAGR and 9.7% PAT CAGR over FY23-25E. We maintain a Buy rating on the stock with revised target price of Rs 1,095 on expectation of 9.7% earning CAGR over FY23-25E, stable margin and attractive valuation."

Stock Outlook

The shares of GNA Axles touched the upper circuit and hit a new 52-week high at Rs 994.25 apiece on BSE. The stock closed 0.98% higher at Rs 987.90 apiece. Its 52-week low is Rs 554.75 apiece. The market cap of the stock is Rs 2,120.57 Crore.

The stock jumped 8.40% in 1 week, while in 1 month, it gained 24.62%. In 3 and 6 months, it gained 22.11% and 36.19%, respectively. It has given 72.24% positive return in 1 year, 79.16% in 2 years, 462.11% in 3 years and 131.28% in 5 years, respectively.

Disclaimer - The stock has been picked from the brokerage report of Sharekhan. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.