Harsha Engineers International - Uncaging New Avenues For Growth: Prabhudas Lilladher Initiates Coverage

Prabhudas Lilladher Report

Harsha Engineers International Ltd. is well placed for long-term growth given its-

1. leadership position in the domestic and global organised bearing cages market (~50-60% share and ~6.5% share respectively),

2. long standing relationships with top bearing players,

3. excellence in tooling and customised precision engineering and

4. increasing share of higher value products in the mix.

We estimate revenue/profit after tax compound annual growth rate of 8.6%/25.5% over FY22-25E driven by outsourcing of cage production and localisation of manufacturing in India, scale up in bronze bushings, precision stamped components and large-size cages, interest and power cost savings, and turnaround in Romania operations.

The stock is currently trading at a price/earnings of 20.2 times/16.3 times on FY24/25E earnings.

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