Up over 100% from 52-week low! Centrum Broking sees 25% upside potential in Tega Industries stock

Shares of Tega Industries have recovered over 100 per cent from its 52-week low of Rs 643.65. The stock jumped 2 per cent in Tuesday's trading session to hit an intraday high of Rs 1,348 on BSE after Centrum Broking initiated its coverage on the stock with a 'Buy' rating and a target price of Rs 1,625.

According to Centrum Broking, Tega Industries offers strong growth prospects in the mill liner industry, a critical consumable in the mineral grinding process. Mill liners are critical consumables in grinding mills for the extraction of minerals from rocks.

The brokerage firm noted that Tega is the fifth largest global player in an oligopolistic industry, gaining rapid market share led by the strong success of a disruptive product DynaPrime. It offers multiple growth levers such as geographic expansion, breakthrough products and a huge scale-up opportunity in McNally’s equipment business.

It added that TEGA presents multiple growth levers for a 15% CAGR over the medium term such as the successful penetration of DynaPrime, a hybrid mill liner, in the metallic liner market, the commissioning of a new manufacturing plant in Chile by April 2025, a new subsidiary in Peru, launch of new smart product offerings, possibilities of large long-term orders such as recently won Rs 6.8 billion five year contract from Europe’s largest copper mine, and ramping up McNally’s equipment business.

With multiple growth levers, Centrum Broking expects Tega to register 18 per cent revenue and 30 per cent earnings CAGR over FY24-26. "Healthy growth prospects and a sustainable EBITDA margin profile of 21-22 per cent will drive 300bps expansion in return ratios to around 20 per cent over the next three years," the brokerage firm said.

About Tega Industries

Tega Industries is the second-largest player in the manufacturing of polymer-based mill liners and the fifth-largest in the overall mill liner industry. The company has three domestic manufacturing facilities at Dahej (Gujarat) and Samli and Kalyani in West Bengal whereas overseas plants are located in Chile, South Africa and Australia.