Linde India stock hits record high before earnings set in

Shares of Linde India Ltd. reached an all-time high, but reversed all of their gains due to profit making.

The industrial gases company’s stock rose 7.23% but pared gains to trade 1.35% around 1:20 p.m. Thursday. It is up 44.37% so far this month compared to the S&P BSE Sensex’s 18.4% advance. The relative strength index is at 93, indicating that the scrip may be “overbought”.

Linde India agreed on August 2 to acquire the packaged gas business of Vadodara-based HPS Gases Ltd., along with some distribution assets from November 1, for Rs 27.5 crore, according to a filing. exchange.

As part of this acquisition, the company will enter into other agreements with HPS Gases such as an asset purchase agreement, a non-competition agreement; and agreement for the supply and purchase of products. “Under these agreements, Linde India will supply liquids to HPS Gases and purchase packaged and mini bulk gases from HPS Gases under a long-term contract with them.”

A week later, the company announced its results for the quarter ended in June. While its revenue rose 7.2% sequentially to Rs 519.1 crore, net profit fell 76% to Rs 72.4 crore as expenses increased.

Linde India had held its annual general meeting on June 24, highlighting its strong growth prospects and strong prospects for orders, among others.

Haitong Securities, in its report dated June 28, expressed confidence in the company.

Main findings of the report:

  • The company expects to benefit from the inflationary trend in the steel sector, new mergers in healthcare, its leadership in high-potential sectors such as electronics, solar, refinery and petrochemicals , hydrogen and decarbonization. It aims to increase capital expenditure to invest in such profitable opportunities.

  • The project engineering division’s order book remained strong at over Rs 1,230 crore and is expected to be executed by 2022. The outlook is also strong with new orders likely to come from the ASEAN region. and Egypt.

  • Synergy profits from the joint venture between Linde India and Praxair amounted to Rs 77.6 crore in 2020, improving Ebitda margin by 590 basis points from the previous year.

  • Synergies have arisen from various initiatives such as capital asset optimization, plant operations, distribution and repairs and maintenance. Management pointed out that the total benefits are likely to exceed Rs 175 crore.

The Shanghai-based research firm maintained its ‘outperform’ rating on Linde India and raised its price target from Rs 1,923 to Rs 2,007, implying a potential upside of 26%.

Since June, the stock has gained 58.45%. Besides Haitong Securities, Antique Stock Broking also suggests a “buy,” according to data from Bloomberg. The stock’s 12-month return potential implies a decline of 22%.