Shares of Honeywell Automation India Ltd. gained the most since Dec. 1 as Nomura expects a recovery in services and exports to lift margins in the second half of the current fiscal.
“Travel resumption should lead to increased commissioning activities and service exports, resulting in rising service revenues and helping maintain gross margins at 49–50%,” the research house said in its Dec. 11 investor note.
This could lead to the Ebitda margin normalising to 19% by FY24, it said.
The research house also expects execution to improve, leading to a strong rebound in sales.
Nomura kept a ‘buy’ rating on the stock and raised the target price to Rs 50,642, implying an upside of about 22%. It largely maintained its earnings per share estimates for FY23–25 and said that valuations are reasonable as compared to peers.
Shares of Honeywell gained 5.19% to Rs 43,693.95 apiece as of 12:55 p.m., compared with a 0.06% decline in benchmark Nifty 50. The total traded volume stood at 1.6 times the 30-day average.
Of the nine analysts tracking the company, four maintain a ‘buy,’ three suggest ‘hold,’ and two recommend ‘sell’, according to Bloomberg data. The average 12-month consensus price target implies a potential downside of the stock is 4.5%.