ICICI Direct has buy call on

with a target price of Rs 215. The current market price of Action Construction Equipment is Rs 169.5.

Action Construction Equipment Ltd., incorporated in the year 1995, is a Small Cap company (having a market cap of Rs 1912.19 Crore) operating in Engineering sector.

For the quarter ended 31-12-2020, the company has reported a Consolidated Total Income of Rs 403.96 Crore, up 49.54 % from last quarter Total Income of Rs 270.13 Crore and up 38.78 % from last year same quarter Total Income of Rs 291.08 Crore.

Investment Rationale
Till now, ACE was largely reliant on the crane segment. The key catalyst for the company from here on is how CE and agri equipment perform. With the current outlook and recent quarter numbers, it believes ACE is set to fire on all cylinders. Taking cognisance, it revises FY22E & FY23E estimates upwards and expect ACE to post revenue, EBIDTA & PAT CAGR of 25.3%, 37.1% & 46.3% respectively. At this juncture, ACE is trading at 8.6x FY23E EV/EBIDTA against an historical up-cycle range of 15-20x. Hence, this calls for a multiple upgrade given the company is on the cusp of posting historically high growth rate. The bokerage values ACE at 11x FY23E EV/EBIDTA and maintain BUY rating with a revised target price of Rs 215 (earlier Rs 160).

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