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IDBI Capital Report
Harsha Engineers International Ltd. delivered results below our estimates. Revenue grew by 4% YoY, while Ebitda and profit after tax exhibited strong growth of 19% and 42% respectively. This was predominantly owing to improved performance of overseas subsidiaries especially from China.
Demand conditions in Europe remain weak while even the US markets registered pockets of softness. Q2 is a seasonally weak quarter for the company with Q4 being the strongest.
The company is witnessing healthy traction in the bushings segment which are used in gear boxes for wind mills. Harsha derives 30-35% of revenues from Europe which continues to experience subdued demand conditions.
The management expects that revenue growth in India, improving profitability in Chinese subsidiary and reduction of losses in Romanian subsidiary will pave the way for growth ahead.
We maintain our Hold rating with target price of Rs 551 at 33 times FY26E expected earnings.
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