Uniparts India may deliver 67% return in 18 months post listing, suggests Ventura’s bull case scenario

Ventura Securities, which has a ‘subscribe’ rating on the ongoing Uniparts India IPO, has set a base 18-month price target of Rs 711 for the stock, suggesting an upside of 23.2 per cent over the IPO price.  The domestic brokerage has a bull case target of Rs 964 (67 per cent potential upside) and a bear case target of Rs 449 (22.2 per cent potential downside) for the stock.

By 12.30 pm, the IPO had generated bids for 20,07,900 shares, which was 20 per cent of the total issue size of 1,01,37,360 shares. A host of brokerages including Nirmal Bang, Religare Securities, Hem Securities and KRChoksey Shares & Securities also have ‘subscribe’ ratings on the issue.

With the gradual recovery in the global economy, rising infrastructure spend in the US, increase in farm income, shift in manufacturing to India, Ventura said Uniparts can deliver revenue growth of 12.5 per cent, Ebitda growth of 12 per cent and PAT growth of 13.5 per cent, over FY22-25 in its base case scenario.

Also Read: Uniparts India GMP drops sharply: Should you still subscribe to the IPO? 

It sees sales in FY25 at Rs 1,747 crore, Ebitda at Rs 377 crore and PAT at Rs 247 crore. That said, it sees Ebitda margin falling 26 bps to 21.6 per cent by FY25 due to input cost pressure. Net margin is expected to improve by 40 bps to 14.2 per cent due to the reduction in debt burden.

In its bull case scenario, Ventura sees FY25 revenues for Uniparts India at Rs 2,000 crore, up 17.7 per cent CAGR over FY22-FY25. It sees net margin at 14.5 per cent.

“We have assumed FY25 revenues of Rs 1,500 crore (FY22-25 CAGR of 6.9 per cent) and net margin of 13.5 per cent and FY25 P/E of 10 times, which will result in a bear case price target of Rs 449 per share (a downside of 22.2 per cent from IPO price),” it said.