Small-cap stock under ₹200: Sharekhan sees 25% upside in Hi-Tech Pipes shares after 60% rally in YTD

Small Cap Stocks: Hi-Tech Pipes share price has given Multibagger returns to Investors having risen 142% over a year. Sharekhan sees 25% upside in Hi-Tech Pipes shares after 61% rally in YTD for Hi-Tech Pipes share price. Here' are 4 key reasons

4 key reasons why Sharekhan expects 25% gains for Multibagger small-cap Hi-Tech Pipes share price

1. Supportive Valuations; Sharekhan analysts stay Positive on Hi-Tech Pipes and they expect a 25% upside in the Hi-Tech Pipes share price, increasing their valuations multiple considering its strong net earnings growth outlook over FY2024-FY2027 estimated.

2. Decline in steel prices to accrue positive- The anticipated decline in steel prices that began in Q2FY2025 has eliminated the pricing difference with secondary pipe players . Average NCDEX steel futures corrected by ~6% in Q2FY2025 till date versus Q1FY2025, which has nullified price spread (Rs. 3000-4000 per tonne during Q1FY2025) with secondary pipe manufacturers. Robust tailwinds for volume growth in H2 will aid in achieving the targeted 30% year-over-year rise in volume for FY2025, highlighted Sharekhan.

3. Capacity Expansions- A long-term, sustainable demand trend prompts the development of plans for growth that will double capacity to 2 MTPA from FY2025 estimated, in the next three to four years with a planned equity issue of up to Rs. 600 crore for which it has already received Board’s approval. Incremental capacities would involve new product segments and geographies providing a fillip to sustainable healthy volume growth and improvement in operational profitability (led by increased value added product share).

4. Early-mover advantage in solar projects: the freshly commissioned Sanand facility will generate incremental volumes and improved operational profitability.

Sharekhan analyst say that since August 24, 2021, when they initiated coverage, the value of hi-tech has increased by almost 260%. With its robust net earnings growth expectation during FY2024–FY2027 estimated, they remain positive on the company and project a 25% upside, raising their valuation multiple.

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