Harsha Engineers International Ltd. made headlines with its recent IPO in Sept’22. Are you confused whether to invest in it or not?
Investing in the share market indeed carries inherent risks, and the uncertainty of future outcomes can be daunting. The task of identifying a reliable and promising company, such as Harsha Engineers International Ltd. after its recent IPO, adds an extra layer of complexity.
Predicting future price is difficult but if done correctly could help investors have a clear picture when to enter and exit from a stock. Let’s come and scientifically calculate share price targets of Harsha Engineers.
Harsha Engineers Share Price
Introduction
Harsha Engineers International Ltd.’s core focus lies in precision engineering, specializing in the manufacturing of a diverse range of products, including bearing cages, needle rollers, and precision-turned components. Harsha Engineers has nurtured a reputation for delivering products that meet the most demanding standards of accuracy, durability, and performance.
Largest Manufacturer of precision bearing cages.
- 94% of revenue comes from manufacturing bearing cages, stamped components, welded assemblies, brass castings, and bronze bushings.
- 6% of revenue comes from the solar EPC business .
- 50 to 60% market share of Indian bearing cages.
- product applications- its products are used in automotive, aviation and Aerospace, construction, mining, agriculture, electrical, electronics, and renewable sector.
- 4 manufacturing facilities in Gujarat, China, and Romania.
- customers from 25 countries like North America, Europe, Asia, South America, and Africa.
- Free wholly owned subsidiaries:- Harsha Precision bearing components in China, HASPL In the USA, and Harsha Engineers B.V. in the Netherlands.
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Harsha Engineers Financials
- Small cap company with market capitalization of 3700 Cr.
- Great ROCE of 17.8%.
- Almost debt-free company with debt to equity ratio of 0.08.
- Good PEG Ratio of 0.36.
- The company has cash equivalent more than debt.
- CAGR Sales Growth of 18% and CAGR Profit Growth of 81% in the last 5 years.
- CAGR Sales Growth of 20% and CAGR Profit Growth of 86% in the last 10 years.
- Sales increased from 95 Cr. in 2017 to Cr. in 2023 but the growth is not linear.Sales increased by 4X in 2018 then reduced in 2019 by more than half then increased again in 2020.
- Operating profit growth is somehow linear from loss of -6 Cr. in 2017 to 174 Cr. in 2023.
- There is a lot of variation in material cost expense. Material cost expense is also variable but when sale is high material cost stabalizes.
- Net Profit has grown from a loss of 1 Cr. in 2017 to 128 Cr. in 2023.
- Reserves have grown from 2 CR. to 1033 Cr. in the same period.
- Fixed assets have grown to 249 Cr. in 2023 from zero.
Calculating Share Price Targets
Here is a sneak peak of our calculations lets see how we got this.
To Calculate future share prices of Harsha Engineers we need to do some assumptions regarding its sales growth in future, and PE ratio that could be given to it by the share market in future.
Harsha Engineers International Ltd. is poised for future growth due to several key factors. Firstly, its niche in precision engineering positions it to capitalize on industries that demand high-quality components, such as automotive, industrial, and bearing sectors.
Secondly, the company’s global reach and collaborations underscore its ability to tap into diverse markets and emerging opportunities. Additionally, Harsha Engineers’ commitment to innovation ensures it stays ahead of industry trends and maintains a competitive edge.
Lastly, its sustainable practices and adaptability to evolving market dynamics further contribute to its potential for sustained growth in the future.
Assumptions
Assumed Sales Growth – 15%
Average PAT Margin – 10%
PE in Base Case -29
PE in Bear Case – 26
PE in Bull Case – 33
Using these assumptions Projected Sales and Net Profits of Harsha Engineers would be :-
| Year | Projected Sales ( In Cr.) | Projected Net Profit ( In Cr.) |
| 2023 | 1025 | 103 |
| 2024 | 1179 | 118 |
| 2025 | 1356 | 136 |
| 2026 | 1559 | 156 |
| 2027 | 1793 | 179 |
| 2028 | 2062 | 206 |
| 2029 | 2371 | 237 |
| 2030 | 2727 | 273 |
| 2031 | 3135 | 314 |
| 2032 | 3606 | 361 |
| 2033 | 4147 | 415 |
| 2034 | 4769 | 477 |
| 2035 | 5484 | 548 |
Harsha Engineers Ltd. Share Price Target
| Year | Share price (Bear Case) | Share price (Base Case) | Share Price (Bull Case) |
| 2023 | 293 | 327 | 372 |
| 2024 | 337 | 376 | 427 |
| 2025 | 387 | 432 | 492 |
| 2026 | 445 | 497 | 565 |
| 2027 | 512 | 571 | 650 |
| 2028 | 589 | 657 | 748 |
| 2029 | 677 | 756 | 860 |
| 2030 | 779 | 869 | 989 |
| 2031 | 896 | 999 | 1137 |
| 2032 | 1030 | 1149 | 1308 |
| 2033 | 1185 | 1321 | 1504 |
| 2034 | 1362 | 1520 | 1729 |
| 2035 | 1567 | 1748 | 1989 |
Harsha Engineers Ltd. Share Price Target 2023
| Year | Share price (Bear Case) | Share price (Base Case) | Share Price (Bull Case) |
| 2023 | 293 | 327 | 372 |
Harsha Engineers share price will range from 293 to 372. Although the CMP of Harsha Engineers is at 415 levels . This is because we have taken PAT margins as 10 while PAT margins this year is 12%. It is observed that PAT margins are increasing every year. To be conservative in our approach we have taken Average PAT margins of 5 years.
The company plans to expand its product portfolio to include new products such as precision components for the automotive and aerospace industries. This will help the company to diversify its revenue streams and reduce its dependence on a few key customers.
According to our analysis Harsha Engineers is overvalued and investors should wait for levels of 293 to enter in this stock.
Harsha Engineers Ltd. Share Price Target 2024
| Year | Share price (Bear Case) | Share price (Base Case) | Share Price (Bull Case) |
| 2024 | 337 | 376 | 427 |
With its well-established position, global demand, and potential for growth, Harsha Engineers International Ltd. emerges as a compelling investment opportunity. The company’s robust presence and adaptability hint at a promising future for investors seeking a foothold in a dynamic market.
Harsha Engineers Ltd. Share Price Target 2025
| Year | Share price (Bear Case) | Share price (Base Case) | Share Price (Bull Case) |
| 2025 | 387 | 432 | 492 |
Share Price will vary from 387 to 492. For new investors buying should be done at levels of 380 (bear levels) and profit could be booked at 490 (bull levels)
Harsha Engineers plans to continue to invest in research and development in order to develop new products and technologies. This will help the company to stay ahead of the competition and meet the changing needs of its customers.
Harsha Engineers plans to expand its geographic reach by entering new markets such as Europe and North America. This will help the company to tap into new growth opportunities and increase its market share.
Harsha Engineers Ltd. Share Price Target 2030
| Year | Share price (Bear Case) | Share price (Base Case) | Share Price (Bull Case) |
| 2030 | 779 | 869 | 989 |
Harsha Engineers plans to improve its operational efficiency by investing in new machinery and equipment. This will help the company to reduce its costs and improve its margins. This will increase its profits to many folds and thereby increasing its share price.
Harsha Engineers Ltd. Share Price Target 2035
| Year | Share price (Bear Case) | Share price (Base Case) | Share Price (Bull Case) |
| 2035 | 1567 | 1748 | 1989 |
Harsha Engineers plans to build a strong brand by investing in marketing and advertising. This will help the company to attract new customers and retain existing ones. Brand gives alot of value to its company.
With its well-established position, global demand, and potential for growth, Harsha Engineers International Ltd. emerges as a compelling investment opportunity. The company’s robust presence and adaptability hint at a promising future for investors seeking a foothold in a dynamic market.
Harsha Engineers International Ltd. stands as a beacon of precision engineering, consistently pushing the boundaries of innovation and excellence. With a global presence, a dedication to quality, and a commitment to sustainable practices, the company continues to shape industries and drive progress. As Harsha Engineers looks to the future, its legacy of precision and performance remains unwavering, ensuring its place at the forefront of the precision engineering landscape.
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Disclaimer- All investments and trading in the stock market involve risk. Any decision to place a trade in the financial markets, including trading in stock should only be made after thorough research. Trading strategies or related information mentioned in the article is for informational purposes only. Use your due diligence before investing. These are just predictions. They may or may not be true. We are not SEBI-registered analysts.