Brokerage firm Prabhudas Lilladher has increased its price target for Harsha Engineers to Rs 520, following a strong Q2 FY2027 performance. While the company reported a 23.6% growth in net profit, investors may monitor rising inventory levels and losses in specific subsidiaries.
Prabhudas Lilladher has revised its price target for Harsha Engineers International to Rs 520, maintaining an 'Accumulate' rating on the stock. This update follows the company’s recent financial results for the second quarter of fiscal year 2027, which highlighted steady performance in domestic markets despite some operational challenges.
In the second quarter, Harsha Engineers reported a consolidated revenue of Rs 440.09 crore, marking a 16% year-on-year increase. The company’s net profit grew by 23.6% to reach Rs 45.03 crore, compared to the same period last year. Operating profitability also showed signs of improvement, with EBITDA margins rising to 18.9% from 17.3% in the year-ago quarter. This growth was largely supported by the company’s domestic engineering business, which expanded by 24.1% and helped offset softer performance in its international subsidiaries and solar business segments.
The engineering firm is banking on its bushings and stampings segments to drive future growth. Management has projected approximately 30% growth for these categories in the current fiscal year. While these segments show promise, the company is still navigating a ramp-up phase for its subsidiary, Advantek. This unit is expected to remain marginally net-profit negative for the full fiscal year as it scales operations.
Investors may note specific areas that warrant caution. A key monitorable is the company’s inventory management. Recent data shows that inventory growth, at 27.2%, has outpaced revenue growth of 15.0%. This difference often signals potential working capital inefficiencies or an accumulation of stock that has yet to be converted into sales. Additionally, the company faces longer conversion cycles in international markets, particularly Japan, though growth in these regions remains a focus area for long-term expansion.
Prabhudas Lilladher has rolled its valuation forward to September 2028, applying a price-to-earnings multiple of 20x to reach the new target price of Rs 520. The company’s shares were trading around Rs 468 as of November 5, 2026, within a 52-week range of approximately Rs 311 to Rs 485. Moving forward, shareholders may track the company's ability to normalize inventory levels, the timeline for turning the Advantek subsidiary profitable, and the consistency of margin expansion across its various business segments.