Responsive Industries Set for 48% Surge: Ventura Securities’ Top Midcap Pick Amid India’s Infrastructure Boom

Responsive Industries, a leading maker of PVC products, is expecting strong growth after a major government infrastructure project announcement. Brokerage firm Ventura Securities has given a “buy” recommendation on the stock, with a target price of ₹436, suggesting a 48% rise over the next two years.

Government Infrastructure Boost

Responsive Industries, which supplies PVC membranes and other synthetic products, sees a great business opportunity after the Ministry of Road Transport & Highways (MoRTH) revealed plans to develop 75 tunnel projects across India. The government has committed ₹1 lakh crore to these projects, aiming to improve national infrastructure and connectivity.

The company believes its PVC membranes, which are used to protect tunnels and ensure their durability, will be in high demand. It has already been involved in significant projects like the Rishikesh-Karanprayag rail link and the Rangpo Tunnel in Sikkim. A spokesperson for Responsive Industries said this infrastructure push aligns with the company’s long-term growth plans.

Stock Performance

In the last year, Responsive Industries’ stock has dropped by 11%, and it’s down 3% in 2024. However, in September, the stock has gained over 11% after falling in July and August. Currently trading at ₹294.40, the stock is still 19% below its 52-week high of ₹364.80 from last September. However, it has climbed 15% from its 52-week low of ₹255.25, recorded in June 2023.

Ventura’s Outlook

Ventura Securities has highlighted Responsive Industries as India’s largest vinyl flooring producer and the fifth-largest globally. The company has a strong presence in both the business-to-business (B2B) and business-to-consumer (B2C) markets, with 2,000 retail outlets across 15 US states.

With the Indian government placing anti-dumping duties on vinyl tile imports since April 2023, Responsive Industries is well-positioned to capture a larger share of the domestic market, valued at $11.4 billion in 2023. Ventura expects the company’s revenue to grow at a compound annual growth rate (CAGR) of 26.2% to reach ₹2,470 crore by FY27. Meanwhile, earnings before interest, taxes, depreciation, and amortization (EBITDA) and net earnings are expected to grow at 50.4% and 100.4% CAGRs, respectively.

Currently, the company is using only 50-55% of its production capacity, but it has planned ₹350 crore in capital expenditure, which should help it remain debt-free. Ventura predicts that by FY27, the company’s return on equity (RoE) will rise to 19.5%, while its return on invested capital (RoIC) will increase to 31.7%.