Shares of Linde India jumped more than 6% after the company signed an agreement with Tata Steel to acquire two 1,800 tons per day air separation units from its Kalinganagar Phase 2 expansion project.
Post the announcement of the agreement, Haitong Securities maintained its 'outperform' rating on Linde India and a target price implying 18.7% upside at Rs 8,546 per share.
"This acquisition will significantly increase Linde India's current production capacity, adding 3,600 TPD to their existing 9,730 TPD, resulting in a 37% increase in total capacity," said the company. "Additionally, for Linde this expansion will boost the existing Kalinganagar capacity from 2,400 TPD to a total of 6,000 TPD at a single location, making it potentially the world's largest single-site ASU."
Haitong sees significant long-term growth opportunities for Linde India that are expected to unfold over the coming years.
Moreover, the brokerage noted that the company's long-term onsite and merchant contracts, which are structured as take-or-pay agreements (subject to certain limits), provide a robust safety net.
The scrip rose as much as 6.08% to Rs 7,640 apiece, the highest level since August 20. It pared gains to trade 3.8% higher at Rs 7,470 apiece, as of 10:06 a.m. This compares to a flat NSE Nifty 50 index.
It has risen 32.58% on a year-to-date basis and 25.72% in the last 12 months. Total traded volume on the NSE so far in the day stood at 3.44 times its 30-day average. The relative strength index was at 48.60.
Out of the two analysts tracking the company, one maintains a 'buy' rating, and one recommends a 'hold', according to Bloomberg data. The average 12-month consensus price target implies an upside of 13.2%.
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