Belrise jumps 6% as Investec shares target, key reasons for its 'Buy' call

Shares of Belrise Industries rose 6 per cent to hit a high of Rs 153.50 on Wednesday after Investec initiated coverage on the stock with a 'Buy' rating. Belrise is a two-wheeler-focused auto ancillary with largely engine-agnostic products. The foreign brokerage said the company is well-positioned, supported by expansion of OEM relationships, launch of new products, and premiumisation of its offerings, which are expected to drive higher average selling prices. 

The brokerage emphasised that the company’s two-wheeler business remains on a strong footing, underpinned by a broader product portfolio that includes suspension systems and steering columns, deeper engagement with OEMs, an expanding client base, and favorable industry tailwinds. Investec also noted that premiumisation in the two-wheeler segment provides an additional boost to growth prospects. The target price at Rs 185 suggests 28 per cent potential upside over Tuesday's closing price.

"The proposed transfer of related party entities into Belrise should simplify the group structure and be value accretive, adding to the re-rating drivers. Valuation of 19x FY27E EPS is reasonable in our view given its strong growth prospects and multiple re-rating catalysts ahead. Initiate with Buy," the foreign brokerage said.

Investec pointed out that Belrise’s four-wheeler business, though nascent, is poised for a significant step-up. The brokerage cited the company’s strong order book, enhanced technical capabilities through the H-One acquisition, and entry into Japanese OEMs and Maruti as key drivers for this expansion. It expects the four-wheeler revenue share to increase to approximately 14 percent by FY28E from 9 percent in FY25, which would broaden the company’s total addressable market and potentially trigger a valuation re-rating.

On the financial front, Investec forecasted that Belrise would deliver around 30 percent PAT CAGR over FY25–28E, supported by 12 percent Ebitda CAGR and deleveraging of the balance sheet. The brokerage also highlighted the planned consolidation of multiple promoter-owned entities into Belrise, describing it as likely to simplify the group structure and be value accretive, further supporting a potential re-rating.

Investec concluded that a valuation of 19 times FY27E EPS appears reasonable, considering the company’s strong growth outlook and multiple re-rating catalysts. The brokerage said that with 10 percent revenue CAGR, 40bps margin improvement, and balance sheet deleveraging, Belrise is well positioned to deliver strong earnings growth, making it an attractive pick for investors.