Buy Vardhman Special Steels, target price Rs 292: ICICI Direct

ICICI Direct has buy call on Vardhman Special Steels with a target price of Rs 292.0. Time period given by analyst is 3 months when Vardhman Special Steels price can reach defined target.

Vardhman Special Steels, incorporated in the year 2010, is a Small Cap company (having a market cap of Rs 1027.26 crore) operating in Metals - Ferrous sector.

Investment Rationale
VSSL has entered into strategic alliance with Aichi Steel corporation (ASC) Japan (main material maker for Toyota). Aichi Steel will share technical knowhow, which would aid VSSL to notably improve its product profile offerings, thereby improving its margin profile.

The share price of VSSL has formed a higher base above 52week’s EMA and is seen resuming its primary uptrend signalling strength and offers a fresh entry opportunity with favourable risk reward set up.

The stock has witnessed a shallow retracement in the last eight months. It retraced just 50% of the preceding five month’s up move (Rs 134-309), signalling a positive price structure and a strong higher base formation at the rising 52 weeks EMA currently at Rs 226 levels.

The brokerage expects the stock to catch up with its peers and head higher towards its all-time high of Rs 292 in the coming months.

Financials
For the quarter ended 31-12-2021, the company has reported a Standalone Total Income of Rs 361.32 crore, up 6.77% from last quarter Total Income of Rs 338.39 crore and up 24.23 % from last year same quarter Total Income of Rs 290.84 crore. Company has reported net profit after tax of Rs 19.47 crore in latest quarter.

Promoter/FII Holdings
Promoters held 60.87 per cent stake in the company as of 31-Dec-2021, while FIIs owned 0.39 per cent, DIIs 1.05 per cent.