ICICI Securities Recommends Buying Mishra Dhatu Nigam with a Target Price of Rs 480

MIDHANI's Q4FY26 EBITDA Misses Estimates, Guidance Offers Hope

ICICI Securities research report highlights the performance of Mishra Dhatu Nigam (MIDHANI) for the fourth quarter of fiscal year 2026. The company's EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) came in at INR 1.16 billion, falling short of estimates. This underperformance can be attributed to lower gross margins, which were impacted by a mix of factors including commodity price inflation. Notably, MIDHANI's revenues for the quarter were in line with expectations, amounting to 46% of the annual execution, as the company successfully executed pent-up orders.

Despite the Q4FY26 miss, ICICI Securities remains optimistic about MIDHANI's prospects. The company's management has provided guidance for INR 150 billion in revenues for fiscal year 2027, with a higher margin profile of 23-25%. This guidance is a positive development, as it suggests that MIDHANI is poised to benefit from the global material supply-chain shift and the Indian government's efforts to expand the aerospace manufacturing ecosystem. The company's recent capability development, including the establishment of a single crystal blade and fastener facility, is expected to augment its margins.

In terms of its order book (OB), MIDHANI has a comfortable level of INR 23 billion. Given the better margin guidance, ICICI Securities has revised its earnings per share (EPS) estimates for fiscal years 2027 and 2028. The new estimates show a 9% increase in FY27E EPS and an 8% increase in FY28E EPS.

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Recommendation Update

Based on its revised EPS estimates, ICICI Securities has raised its target price (TP) for MIDHANI to INR 480, which is based on a price-to-earnings (P/E) multiple of 35x for fiscal year 2028 EPS.