ICICI Direct Sets ₹170 Target On GEE Ltd After Initiating Coverage

Brokerage firm ICICI Direct has initiated coverage on small-cap welding consumables maker GEE Ltd with a Buy rating and a target price of ₹170, pointing to an estimated 37% upside from its current market price of ₹124. In a recent research report, the brokerage stated the company is set for an earnings recovery driven by higher manufacturing capacity, better facility utilisation, and new offerings in nuclear power and defence shipbuilding.

Growth Drivers And Financials

GEE plans to expand its installed capacity from 59,075 metric tonnes per annum to 71,339 metric tonnes per annum. Capacity utilisation is projected to rise from 57% in financial year 2026 to 74% by financial year 2028, with capital expenditure pegged at ₹30 to ₹40 crore over the next three to four years. The company is diversifying from basic welding items into submerged arc welding wires, flux-cored wires, stainless-steel wires, and specialised alloy products, which are used in heavy engineering, power equipment, and railways. Furthermore, GEE has secured an approval from the Nuclear Power Corporation of India and supplied materials for Indian Navy vessels including INS Dunagiri, INS Agray, and INS Sanshodhak. The firm's Thane land parcel could also unlock more than ₹400 crore over five years through a development agreement. ICICI Direct expects GEE's revenue to grow from ₹369 crore in financial year 2026 to ₹614 crore by financial year 2028, while net profit is projected to jump from ₹13 crore to ₹36 crore over the same period. EBITDA is estimated to reach ₹61 crore by financial year 2028 with margins improving to 10%, supported by operating leverage and a richer product mix. Potential risks to these projections include sharp spikes in raw material costs, margin pressures, and competition from other manufacturers.

Context

Brokerage firms frequently initiate coverage on small-cap companies when they spot potential for growth driven by operational changes or new sector entries. Manufacturing firms often boost their financial returns by moving away from commodity products toward specialised, high-margin items used in critical industries like defense and nuclear energy.