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Choice Recommends Ratnaveer Stock Amid Electronic Materials Expansion
Ratnaveer Precision Engineering makes stainless-steel products and is starting a new electronic-materials business.
It plans to manufacture copper-clad laminate, a material used in electronics.
The company says this project could help replace products currently imported into India.
It also raised ₹329.99 crore through a rights issue.
More than the full issue was subscribed by investors.
Choice Equity Broking believes the company could benefit from solar equipment demand and stronger supply chains.
The brokerage recommended buying the stock and gave a target price of ₹388 in its detailed valuation.
However, the company still faces risks from higher costs, depreciation and delayed customer payments.
Choice Equity Broking initiated a Buy rating on Ratnaveer Precision Engineering with a reported target of ₹388, implying about 27.3% upside from ₹305.
Ratnaveer’s ₹329.99 crore rights issue was subscribed 1.11 times, with 12,499,669 shares offered at ₹264 each.
The rights shares were scheduled for demat credit and listing on the NSE and BSE on September 15, after allotment finalisation.
The company is entering electronic materials through an ECMS-approved FR-4 Copper Clad Laminate project in Alindra, Vadodara.
Shares closed 7.16% lower at ₹288.50 on September 11, despite gaining about 80% in three months and 103% in six months.
- Who
- Ratnaveer Precision Engineering Limited and Choice Equity Broking.
- What
- Ratnaveer is raising funds through a rights issue and expanding into electronic materials, while Choice has issued a Buy recommendation.
- Where
- The company is headquartered in Gujarat, and its FR-4 Copper Clad Laminate project is located at Alindra, Savli, Vadodara.
- When
- The stock closed on Friday, September 11; the rights shares were scheduled to list on September 15. The electronic-materials project is planned for FY26.
- Why
- The expansion is intended to address India’s import-dependent electronic-materials market and benefit from solar hardware demand, import substitution and China+1 supply-chain diversification.
Growth case
Risk considerations
Electronic-materials expansion
Growth case
Choice expects the ECMS-approved FR-4 Copper Clad Laminate project to support a step-change in business mix and give Ratnaveer first-mover positioning.
Risk considerations
The project is a new business area, and the article does not provide completed-project financial results or confirm how quickly it will contribute to revenue.
Funding and financial profile
Growth case
Choice says rights-issue proceeds should reduce reliance on working-capital borrowing and may partly offset higher interest costs.
Risk considerations
The brokerage cautions that finance costs and depreciation may increase, while revenue will depend partly on the pace of receivables collection.
Stock valuation
Growth case
Choice values the company at a premium because of its business-mix change, electronic-materials entry and potential exposure to solar hardware and China+1 demand.
Risk considerations
The stock was described as trading at a modest premium, at 25.5 times estimated FY28 earnings based on the report’s stated ₹305 reference price.
Key facts
- Brokerage view
- Choice Equity Broking rated the stock Buy.
- Target price
- The report gives a detailed target of ₹388 per share for a 12-month horizon; the article also mentions ₹288, creating an internal discrepancy.
- Rights issue
- ₹329.99 crore raised through 12,499,669 shares priced at ₹264 each.
- Rights subscription
- The issue was subscribed 1.11 times.
- Latest reported close
- ₹288.50, down 7.16% on BSE on September 11.
- Market capitalisation
- ₹2,421.28 crore.
- Recent performance
- The stock gained about 79.96% in three months, 103% in six months and 97% in one year.
Quotes
Choice Equity Broking
Brokerage firm providing the investment analysis and recommendation
“At the CMP of Rs. 305 the stock trades at 25.5x FY28E EPS. We value REPL at 32.5x (based on FY28E EPS of Rs. 11.9), a modest premium justified by the step-change in business mix and first-mover positioning, giving a target price of Rs. 388 and 27.3% upside. We initiate with a BUY.”
livemint.com
Sources
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