28 C
Mumbai
Wednesday, September 28, 2022

₹93 to ₹41,898: Debt-free multibagger stock turns ₹1 lakh to ₹4.5 Cr in 23 years: Should you buy?

With a market cap of Rs. 37,117.55 crore, Honeywell Automation India Ltd. is a large cap firm that serves the industrial market. A Fortune India 500 firm and a market leader in offering integrated automation and software solutions, including process solutions and building solutions, is Honeywell Automation India Limited (HAIL). The company offers a broad range of products in the areas of sensing and control, environmental and combustion controls, and automation and control, as well as engineering services to clients all over the world. The shares of HAIL are a perfect example of multibagger stocks, having grown from an investment of 1 lakh to 4.5 crore over the course of 23 years. As per the data of Value Research, Honeywell Automation India Ltd currently holds a debt-free status.

Honeywell Automation India Share Price History

On the NSE, Honeywell Automation India Ltd. shares closed today at Rs. 41,898.00 per share, down 2.60% from the previous close of Rs. 47,275.95. The stock’s price climbed from 93 per share on January 1st, 1999, to the level it is at now, representing a multibagger return and an all-time high of 44,951.61%. This means that an investment of 1 lakh made in this stock 23 years ago would have grown to 4.50 Cr now. The stock price has risen over the past five years from 13,334.05 as of September 1, 2017, to the present market price, resulting in a multibagger return of 214.22% and an approximate CAGR of 25.73%.

In the last 1 year, the stock has gained 7.16% and on a YTD basis, the stock has fallen 1.43% so far in 2022. In the last 6 months, the stock has gained 3.09%, 11.35% in the last 1 month and 3.85% in the last 5 trading days. On the NSE, the stock had touched a 52-week-high of 47,275.95 on 05-October-2021 and a 52-week-low of 30,185.35 on 26-May-2022 which indicates that at the current market price of 41,898.00 the stock is trading 11.37% below the 52-week-high and 38.80% above the 52-week-low. At the current market price of 41,898.00 the stock is trading lower than 5 days EMA but higher than 10 days, 20 days, 50 days, 100 days, and 200 days Exponential Moving Average (EMA).

Honeywell Automation India Q1FY23 Results

The company reported a net profit of 101.97 crore for Q1FY23 as opposed to 91.53 crore for Q1FY22, representing a YoY growth of 11.4%. For the quarter that ended on June 30, 2022, the company’s revenue from operations climbed by 15% year over year to 786.17 crore from 683.20 Cr in Q1FY22. Profit Before Tax (PBT) for the company climbed by 11.13% to 137.36 crore in Q1 FY23 from 123.60 crore in Q1 FY22. Total expenses for the company were 678.01 crore in Q1FY23, up from 581.40 Cr in Q1FY22, a 16.61% year-over-year growth.

Should you buy the shares of Honeywell Automation India?

The brokerage firm Sharekhan has said in a note that “Q1FY23 performance was above estimates. Revenue was up by ~15% yoy to 786cr (versus our expectations of 744cr). Gross profit margins declined to 48.8% versus 52.3% in Q1FY22 due to higher raw material costs. As a result, operating profit growth was restricted to ~5% yoy to 122 cr despite proportionate decline in staff cost and other expenses. OPM came in at 15.5%, lower by 157 bps (but higher than our estimate of 14.5%). Net profit increased by ~11% yoy to ~Rs. 102 crore (Vs our estimate of 87 crore) supported by higher revenues and other income. The company has strong cash position and asset-light business model.”

“The company has multiple domestic growth levers such as the government’s infrastructure investments, including smart cities, airports, metros, railways, ports, over the next five years as well as growing automation demand from metals, healthcare and cybersecurity segments. Continued government spending on the country’s core infrastructure and development of large-scale data centers would help the company grow at a healthy pace going ahead. As per annual report, the company’s external order book has increased 31% yoy and demand outlook remains robust for process and building solutions from all the key user industries. An asset-light model (nil debt), strong cash position, healthy free cash flow generation and promising long-term growth prospects in the automation space justify the stock’s premium valuation. Further, supply chain disruptions faced by the industry especially for semi-conductor chips and electronic components is easing. This shall boost revenue and earnings growth. We expect Revenue/PAT CAGR of ~19%/37% over FY22-24E. We retain our Buy rating on the stock with a revised price target (PT) of Rs. 49,750 factoring upward revision in estimates,” said the research analysts of the broking firm Sharekhan.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.

More Less

Subscribe to Mint Newsletters

* Enter a valid email

* Thank you for subscribing to our newsletter.

Latest news
Related news