Carrier Airconditioning and Refrigeration Ltd.: Strong Performance and Achieved Targets Signal Continued Potential

Carrier Airconditioning and Refrigeration Ltd. demonstrated impressive performance, with margins trending upward and successfully returning to its pre-COVID levels. The stock is currently trading at Rs. 645, marking an 18% increase from the previous month. Initially, at the investment price of Rs. 360, our analyst set a target price of Rs. 444, based on a P/E multiple of 34.5x. This target has been achieved, and the stock continues to hold significant potential, contingent on sustained margin growth.

Further analysis and relative valuation at the current price of Rs. 645 revealed that the company remains undervalued. This assessment is based on a P/E ratio of 62.4x, which is below the industry average of 75-80x, and an EV/EBITDA multiple of 39.9x, also below the industry standard of 46.3x. A detailed evaluation, considering current market conditions, calculated the stock's intrinsic value to be Rs. 740, after applying a discount adjustment. These metrics suggest an investment opportunity. Therefore, it is recommended to hold onto the stock, with a buy rating.