Shares of Graphite India have gained the most since June 2023, rising as much as 8% on Thursday after brokerage firm Jefferies reiterated its "buy" recommendation on the stock.
Additionally, the brokerage also raised its price target on the graphite electrode manufacturer to ₹650 from ₹543 earlier. The revised price target implies a potential upside of 19% from Wednesday's closing level.
Jefferies wrote in its note while volumes for the company grew year-on-year due to better utilisation, it expects pricing and margin pressure to persist for the next two to three quarters.
As a result, it has cut Graphite's financial year 2025 and 2026 EBITDA estimates by 2% to 7%.
The brokerage is expecting financial year 2024 to be muted for these companies, including HEG, but it remains cautiously optimistic on the macro economic environment for financial year 2025.
Jefferies also mentioned that there are new Electric Arc Furnace (EAF) steelmaking capacities coming up.
It also highlighted how peer GrafTech, the biggest graphite electrode player, who cut its GE capacity by 24,000 MT due to lower utilisation.
Graphite India currently has cash worth ₹3,200 crore on its books.
Additionally, Jefferies has also raised its price target on Graphite's peer HEG to ₹2,300 from ₹2,110. Shares of HEG are also trading with gains of 6%.
Shares of Graphite India are trading 8.5% higher at ₹591.85. This is the biggest single-day gain for the stock since June 2, 2023.
First Published: Feb 22, 2024 11:10 AM IST
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