Choice Broking sees up to 25% rise in this mid-cap stock. Should you buy?

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Timken India shares have been giving upside movement for the last one year. In this period Timken share price has shot up from 1040 to 1700 levels — logging around 65 per cent rise in this period. However, Choice Broking is seeing more upside move in this anti-friction ball bearing maker company’s stock price on record budgetary allocation to the Indian Railways. Apart from this, Timken India has acquired ABC Bearings that has enabled the company to create new business opportunity worth 450 crore to 500 crore in wheel segment. The brokerage report says that the stock may go further upside from 1702 to 2132.80 per share levels — around 25 per cent higher in long-term.

Highlighting the fundamentals that may support this mid-cap stock rally further, the Choice Broking report said, “With a record high budgetary allocation of 1.1 lakh crore for FY22, the total capital expenditure of Indian Railways (IR) is expected to touch 2.15 lakh crore in the fiscal — highest ever in a year. As per the announced plans, Indian Railways is expected to increase the LHB coach production to 6500 units in FY22. Also, as coach upgradation gathers pace, older trains are gradually upgrading to Cartridge Taper Roller Bearings (CTRB) while new trains are coming with 100% CTRB.”

The Choice Broking report further says that in railway freight application, Timken India Limited enjoys 50 per cent market share. Mainly due to its lower field failure rates, TIL is a technical partner for Indian Railways dedicated freight corridor. High speed trains is other area where TIL’s products will find market and acceptance. With around two-dozen metro projects lined up, India is massively looking to expand the metro rail coverage. TIL currently has more than 60 per cent of share in metro bearings market with potential revenue of 100 crore per annum in the next five years.

On acquisition of ABC Bearings aiding expansion of TIL’s market, Choice Broking report says, “After the acquisition of ABC Bearings, TIL has gained access to new market segment — the wheel-end segment with a market size of 450 to 500 crore. Post-Covid pandemic, the company can further grow in this segment as historically, this market segment was flooded with cheap imports from China.”

The brokerage report on Timken India Limited says that the company is planning to foray in export market via its cylindrical and spherical roller bearings manufactured at Baruch plant.

On its suggestion to long-term investors in regard to Timken shares, the Choice Broking report said that one can buy this counter at CMP ( 1702 apiece) for 18 to 24 month target of 2132.80 per share levels — around 25 per cent upside in long term.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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