Multibagger stock RHI Magnesita erases 6-month losses with 36% surge in 2 weeks. More upside ahead?

Multibagger small-cap stock: Shares of RHI Magnesita India, which manufactures and markets special refractory products, systems, and services to the steel industry, have been making significant strides on Dalal Street even as the frontline indices have been gyrating between gains and losses amid escalating global trade tensions.

The multibagger stock, amid high volumes, has gained 36% in just the last two weeks, rising from ₹392 apiece to ₹533. This was the longest weekly run for this small-cap stock in recent history, helping it erase its six-month sustained drop, which occurred from September to mid-March, during which it lost 36.20% of its value.

Apart from the surge in volumes, the stock has benefited from a broader shift in sentiment toward small-cap stocks over the past month, driving its stellar rise.

Nevertheless, the Nifty SmallCap 250 constituent stock still remains 40% below its recent peak of ₹892.90. Notably, it experienced a steady one-way rally from April 2020 to January 2023, closing 20 months in positive territory and recording a massive gain of 726%. The stock is currently trading with a 357% gain over the last five years.

Can this multibagger stock rally more?

Anshul Jain, Head of Research at Lakshmishree Investment and Securities, said that the stock has witnessed a sharp rally from 380 levels, backed by double high-volume bars with a massive volume surge of 412% and 6,337%, signaling strong buying interest.

In the near term, he expects the stock to test the daily swing high of 580. However, he notes that for the rally to shift from a temporary rebound to a sustained uptrend, a weekly close above 580 is crucial. Until then, he sees dips toward 490-500 as a potential buying opportunity for a move toward 580. He advises traders to watch for volume confirmation and continued strength above key levels.

About the company

The company is a leading manufacturer and supplier of high-grade refractory products, systems, and solutions that are critical for high-temperature processes exceeding 1,200°C in a wide range of industries, including steel, cement, non-ferrous metals, and glass. It serves customers both domestically and globally.

For the December-ending quarter, the company reported a strong set of numbers, as its quarterly revenue exceeded ₹1,000 crore for the first time, reaching ₹1,011 crore, an increase of 9.5% YoY. Despite rising raw material costs, the company managed to achieve EBITDA growth of 8%, driven by its operational efficiencies.

Profit after tax grew by 10% YoY, reaching ₹48 crore. Looking ahead, the company acknowledges near-term challenges due to the global market environment. However, it remains cautiously optimistic about its mid-term goals.

According to the December quarter shareholding pattern, retail investors own a 26% stake in the company, while the promoters hold a significant 56.1% stake.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.