Multibagger Shilchar Technologies soars 11550% in 4 years, 577% in last 1 year; should you buy?

Multiagger stock Shilchar Technologies has emerged as a top performer for long-term investors, demonstrating phenomenal returns. Over the last four years, its stock price has skyrocketed by an astounding 11550 percent, surging from ₹53.28 in June 2020 to approximately ₹6,207 presently. This exceptional growth underscores Shilchar's consistent value appreciation, positioning it prominently in the penny stock segment and solidifying its reputation as a lucrative investment opportunity.

Moreover, in the past three years alone, the stock has surged impressively by 6168 percent, climbing from ₹99 in June 2021.

Recent performances have further underscored Shilchar's stellar track record, with gains of 577 percent over the past year and a remarkable 145 percent year-to-date in 2024.

The stock has shown a strong performance this year, with gains in 5 out of the 7 months. July alone saw a robust increase of over 12 percent in just 4 trading sessions, following a 9.5 percent rise in June. However, it faced a setback in May with a decline of approximately 22 percent. Prior to that, April marked a significant rally of 68 percent after a slight dip of 3.2 percent in March. The positive trend began earlier in the year, with gains of 17.5 percent in February and 33.5 percent in January.

The stock is currently just 5.5 percent away from its record high of ₹6,769.50, hit on April 24, 2024. Meanwhile, it has soared 614 percent from its 52-week low of ₹895.

Shilchar Technologies Limited engages in the manufacture and sale of transformers and parts in India. It provides power and distribution transformers, and electronics and telecommunication transformers for solar and wind energy. The company also exports its products. Shilchar Technologies Limited was formerly known as Shilchar Electronics Limited. The company was incorporated in 1986 and is based in Vadodara, India.

Brokerage house Anand Rathi recently visited Shilchar Technologies’ Vadodara plant and engaged with its management. A specialised firm, Shilchar focuses on supplying transformers, including inverter duty transformers (IDT) and distribution transformers, primarily for the solar and wind sectors in renewable energy. While capable of manufacturing transformers up to 132kV, the majority of its production remains focused on 66kV and lower, noted the brokerage.

Approximately 50 percent of its revenue comes from exports, with an average realisation of around ₹1 million per MVA. The company is expanding its capacity by 3,500 MVA from its current 4,000 MVA to meet growing demand in both domestic and international renewable energy markets. Anand Rathi believes Shilchar Technologies is well-positioned to benefit from the ongoing capital expenditure in the renewables sector.

The brokerage noted that from FY21 to FY24, Shilchar Technologies achieved a robust 50 percent compound annual growth rate (CAGR) in revenue, with the EBITDA margin expanding significantly from 8.1 percent to 28.5 percent. Adjusted profit after tax (PAT) also grew at a compound annual growth rate of 155 percent.

Currently, the stock is trading at 33 times the FY24 earnings per share (EPS) of ₹120. Looking forward to FY26, the company previously guided revenue expectations in the range of ₹800 crore to ₹900 crore, while aiming to maintain its full-year margin of around 28 percent.

However, risks identified by the brokerage include intensified competition from peers potentially entering the inverter duty transformer (IDT) manufacturing segment, and increased competitive pressures in the export market that could impact margins.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.