Recommendation from Auto Ancillaries - Others and Iron & Steel

The scrips in this column have been recommended with a 15-day investment horizon in mind and carry high risk. Therefore, investors are advised to take into account their risk appetite before investing, as fundamentals may or may not back the recommendations.

LUMAX AUTO TECHNOLOGIES LTD
CMP - ₹362.65
BSE CODE 532796
Volume 2,207
Face Value ₹2
Target ₹394 - 410
Stoploss ₹362 (CLS)

With more than 40 years of expertise supplying auto components to OEMs and the aftermarket, Lumax Auto Technologies is one of the industry leaders in the production of automotive components. Considering the company's quarterly performance, on a consolidated basis it reported a healthy growth of 18.32 per cent from ₹416.93 crore registered in Q4FY22, recording total revenue of ₹493.33 crore in Q4FY23. When comparing the net profit for the fourth quarter of FY23 to the same quarter last year, it fell 11.37 per cent from ₹21.04 crore to ₹18.64 crore. Considering the potential of electric mobility, the company started commercial production of JV with Alps Alpine to produce and sell electric components. Furthermore, it purchased a 75 per cent stake in IAC India, a trusted Tier-1 interior systems and component supplier. Shares have soared nearly 65 per cent in the last six months, and with a 52-week high of ₹394 per share on the BSE, there is still room for growth. Hence, we recommend BUY.

Gallantt Ispat Ltd
CMP - ₹72.80
BSE CODE 532726
Volume 21,843
Face Value ₹10
Target ₹82 - 88
Stoploss ₹69(CLS)

Gallantt Ispat is a leading iron and steel manufacturing company located in eastern Uttar Pradesh. The company is engaged in the business of iron and steel, agro, power and real estate. In March 2023, the company's net sales reached ₹1,075.99 crore, marking a growth of 24.67 per cent compared to ₹863.09 crore in March 2022. However, the EBITDA for March 2023 stood at ₹125.21 crore, showing a decline of 18.47 per cent from ₹153.57 crore in March 2022. Additionally, the quarterly net profit for March 2023 amounted to ₹67.92 crore, witnessing a decrease of 23.6 per cent in comparison to ₹88.90 crore in March 2022. The company signed an agreement with East Coast Railway, Odisha, to buy railway wagons, resolving the wagon shortfall with Indian Railways. This strategic move is expected to lead to significant savings in freight costs for the company. The company may consider acquiring more railway rakes in the future to facilitate faster movement of raw materials for the company's needs. Hence, we recommend BUY.