IN : Heranba Industries Ltd - Growth headwinds on the cards

Lack of production capacity, a slow growing market, rising raw material prices and intense competition for global leaders are headwinds for Heranba. We forecast revenue to grow at 6.4% CAGR over FY21F-23F, but declining gross margins should lead to PAT declining at 1.55% CAGR over FY21-23F. We value the company at 15x one-year forward P/E. We initiate coverage on Heranba Industries with a Reduce rating and TP of Rs457.