Belrise Industries: Jefferies sees 19% upside on new orders and expansion – 5 reasons behind the ‘Buy’ call

According to the brokerage report, the revised target implies a potential upside of nearly 19% from current levels.

As per the Jefferies report, Belrise continues to strengthen its business footprint despite facing near-term cost pressures from fuel, logistics and commodity inflation.

Let’s take a look at the key reasons why the brokerage house is bullish on this stock and the rationale behind this –

Q4 earnings remain largely in line with expectations

Belrise Industries reported a mixed but stable set of numbers for the March quarter. According to the Jefferies report, Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) and Profit After Tax (PAT) grew 5% and 17% year-on-year respectively.

The company’s manufacturing revenue saw healthy growth during the quarter, although trading revenues remained weak. Overall revenue still managed to grow 12% year-on-year.

Jefferies report noted, “March Quarter EBITDA and PAT grew 5% and 17% YoY, respectively, in line with Jefferies Estimates.”

The company’s net interest expenses also declined sharply after the benefits of IPO proceeds started reflecting on the balance sheet.

Margin pressure remains, but management stays confident

One of the key concerns highlighted by Jefferies is the pressure on operating margins. Rising fuel prices, transportation expenses and commodity costs weighed on profitability during the quarter.

The company also incurred a one-time expense linked to the acquisition of SDM in France, which impacted margins temporarily.

According to the brokerage report, “Belrise faces pressure from higher commodity and fuel prices, as well as increased transportation and labor costs.”

Even then, management believes margins can remain stable over the full financial year through cost-control measures and pass-through mechanisms.

According to the brokerage report, “It still expects its FY27 margins to be broadly similar to FY26, with cost pass-through to customers and internal cost controls.”

Jefferies also noted that Belrise has historically maintained relatively stable profitability levels despite cyclical fluctuations in the auto sector.

New orders improve future revenue visibility

Another major reason behind the bullish stance is the company’s recent order wins from two-wheeler and three-wheeler manufacturers.

According to the brokerage report, Belrise has secured fresh orders for exhaust systems and fuel tanks from leading automobile manufacturers. The brokerage believes one of the clients is likely TVS Motor Company.

These projects are expected to begin production over the next few quarters and may contribute nearly Rs 300 crore in annual revenue after full ramp-up.

According to the brokerage report, “These orders will start production in Q2FY27 and Q4FY27, respectively.”

Aerospace and defence expansion becomes a new focus area

Apart from its core auto business, Belrise is also expanding into aerospace and defence manufacturing.

The company recently completed acquisitions in France and the United Kingdom to enter the global aerospace supply chain. It has also signed a strategic agreement with an Israeli company to explore defence opportunities jointly.

According to the brokerage report, “With two recent acquisitions in France and UK, Belrise has entered into global aerospace components supply chain.”

Strong earnings growth outlook 

Jefferies expects Belrise Industries to deliver healthy earnings growth over the next two financial years despite ongoing global uncertainties.

According to the brokerage report, “We expect strong 26% EBITDA and 30% EPS CAGR over FY26-28E.”

The brokerage has slightly adjusted its estimates by factoring in somewhat lower margins, but it still expects earnings momentum to remain strong.

At the same time, Jefferies also highlighted certain risks investors should monitor carefully. According to the brokerage report, dependence on a few large customers and the possibility of higher-than-expected margin pressure remain key concerns for the company going forward.

Disclaimer: Investment decisions should not be based solely on brokerage ratings or price targets. The financial analysis and ‘Buy’ recommendations mentioned above represent the views of Jefferies and do not constitute personal financial advice or an offer to solicit business. Readers are advised to consult a SEBI-registered financial advisor before making any investment decisions to assess suitability based on their individual risk profile.

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