Tega Industries shares jump 10% to hit new 52-week high; is more steam left in this stock?

Shares of Tega Industries surged to its upper circuit limit of 10 per cent on Wednesday to hit a new 52-week high after the company reported a strong performance in the period that ended on March 31, 2023. Analysts continue to remain positive on the metal and mining firm.

Tega Industries reported a 36.7 per cent on a year-on-year (YoY) basis in operating revenue at Rs 396.4 crore, while its operating EBITDA increased 49.2 per cent to Rs 102.8 crore. The company's profit after tax (PAT) for the quarter stood at Rs 77.3 crore, up 58.2 per cent YoY.

In an exchange filing, Tega Industries, which caters to the global mineral, mining and bulk solids handling industry, announced that it has acquired McNally Sayaji Engineering for Rs 165 crore. This acquisition includes debt of Rs 100 crore and equity of Rs 65 crore. The management also said that the planned expansion project in Chile is progressing well.

Following the announcement of results, shares of Tega Industries rallied 10 per cent, locked in buyers circuit, at Rs 899.85. The stock hit its new record high and commanded a market capitalisation (m-cap) of close to the Rs 6,000 crore mark. The scrip had settled at Rs 818.05 on Tuesday.

Brokerage firm LKP Securities remains positive as it is well positioned to seize the opportunity within the sector it operates and the future growth prospects remain intact given green field expansion in Chile to increase growth opportunity in LATAM; value accretive acquisition to diversify revenue stream and increase product offering.

It also sees higher penetration opportunities for DynaPrime liners, to deliver 25-30 per cent CAGR over FY22-25E and sustainable EBITDA margins due to operating leverage. "We have tweaked our estimates upwards given its strong performance across all parameters in FY23," it added, maintaining a buy rating on the stock with a target price of Rs 945 apiece.

Shares of Tega Industries, which were listed at bourses in December 2021, have surged about 115 per cent from its 52-week low at Rs 420.40 in June 2022. The stock has gained about 55 per cent in the year 2022 so far, while it has gained about 36 per cent in the last one month.

Tega Industries reported a beat on JM Financial estimates. "Margins expanded by 220 bps YoY to 25.9 per cent. Management highlighted that medium-term sales growth is expected to be 15 per cent CAGR across both segments, while margins in consumable business have further room to expand as a passthrough of higher RM costs is still underway," said the brokerage.

It expects blended EBITDA margins in the 21-22 per cent range due to a strong volume growth trajectory; near completion of the price hike cycle and peak freight costs already behind. However, ramp up in revenue contribution from equipment to dilute margins to a certain extent, it said with a buy rating and a target price of Rs 900, which has already been met.

"We maintain our positive stance on Tega on higher penetration opportunity for Dynaprime liners, to deliver 25-30 per cent CAGR over FY23-25E; cross-selling opportunities of other products and equipment to aid in outpacing the industry growth; green field expansion in Chile to increase growth opportunity in LATAM; and sustainable EBITDA margins" JM Financial added.


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