RR Kabel: Up over 30% from IPO price in less than 2 months, JM Financial sees more upside – key reasons

livemint.com:

JM Financial has initiated coverage on the wire and cable manufacturer RR Kabel with a ‘buy’ call. The brokerage is bullish on the stock on the back of its industry-leading revenue growth track record, strong outlook, industry tailwinds, and healthy performance. It has a target price of ₹1,650 for the stock, implying an upside of over 21 percent in 12 months.

JM also sees a potential of 20 percent internal rate of return (IRR) over the next 3 years. "RR Kabel (RRK) has delivered the highest compounded growth in revenue among peers and robust EBITDA growth across 3/5/10 year periods along with a respectable RoCE profile (>15 percent post-tax). We believe RRK is well placed to repeat its strong performance on the back of a) industry tailwinds in domestic and export markets for W&C, and b) robust distribution and portfolio expansion in FMEG.

We initiate coverage with a BUY rating and a Dec’24TP of ₹1,650, basis 35xDec’25EPS (22 percent upside), and see a potential of 20 percent IRR over the next 3 years," said the brokerage. Currently trading at ₹1,356.35, the stock has advanced over 31 percent from its IPO price of ₹1,035. It made a strong debut on September 20, 2023, listing at a 14 percent premium to its issue price.

From its listing price, the stock has risen over 15 percent in a little over 1 month. The stock also hit its record high of ₹1,524.55 on October 5. However, for the entire month of October, the stock was down over 3 percent.