Long-term investors of RACL Geartech Limited stock have made significant gains as the shares have zoomed over 4,600 per cent in the last 10 years.
At 14:50 hours, the shares were trading 1 per cent lower at Rs 740 on BSE on Friday. The market cap of the firm fell to Rs 797.84 crore.
Currently, the shares are down over 8% from their 52-week high of Rs 811, hit on December 6, 2022. HDFC Securities believes that the company has maintained a strong and profitable growth track record.
Due to its niche manufacturing capabilities, the company is the preferred supplier for some of the luxury OEMs like BMW, Kubota, DANA, and Lamborgini in international markets & Honda, Yamaha, KTM & Piaggio in domestic markets, the brokerage firm said.
It expects RACL Geartech’s Revenue/EBITDA/PAT to grow at 20/22/19% CAGR over FY22-FY25E, led by increased demand from existing customers and the addition of new clients.
HDFC Securities believes investors can buy the stock in the Rs 710- 725 band and add on dips in Rs 640-655 band (18.5x Sep’24E EPS) for a base case fair value of Rs 785 (22.5x Sep’24E EPS) and bull case fair value of Rs 855 (24.5x Sep’24E EPS) over the next 2-3 quarters.
“The company has also made a name in the international market by exporting around
65-70% of its products across developed economies like Germany, Japan, Switzerland, Italy, USA, Austria, Thailand among others,” it noted.
RACL Geartech was incorporated in 1983 and is engaged in the business of manufacturing transmission gears and shafts for automotive and industrial applications.