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Multibaggers of past decade, solid show in Q2, but stocks down 50%: Get the cue : 27 Nov 2019

Capitalstars Investment Advisor
Who does not want big compounders in an equity portfolio? There are 14 multi-baggers on Dalal Street that reported over 100 percent rise in the September quarter profit along with an increase in top line. And many analysts look positive on them. A good case to take a serious look at these names?

With a 37,834 percent leap in 10 years, Avanti Feeds emerged top gainer on the list. The scrip jumped to Rs 528.60 on November 22 from just Rs 1.40 on November 23, 2009. The company, engaged in shrimp processing and manufacturing of prawn and fish feeds, reported a 155 percent year-on-year (YoY) rise in net profit in Q2FY20 on over 41 percent rise in net sales.

But the stock trades at a price 47 percent below its all-time high of Rs 1,000.

In Q2FY20, average shrimp prices (Mexican Shrimp-30 count) in the international markets reached $13.1 a kg (up 10% YoY), which resulted in a spike in domestic farm gate prices to Rs 430-450 a kg, benefitting the sector, Edelweiss Professional Investor Research said in a report.

“We have revised our earnings estimates for the company upward by 12 percent for FY20E and 13.5 percent for FY21E,” Edelweiss said about Avanti Feeds in an October note.

Fairchem Speciality (up 5,073 percent), Alkyl Amines ChemicalsNSE 4.37 % (up 3005 percent) and Deepak NitriteNSE -0.56 % (up 2,713 percent) are other similar cases on top of the list.

Fairchem posted an 837 percent YoY rise in September quarter net profit, while Deepak Nitrite grew its bottom line 532 percent and Alkyl Amines 106 percent. These companies also posted a 50-150 percent increase in net sales for the quarter.

Equentis is positive on Deepak Nitrite (DNL) with a 15-18 month price target of Rs 431-462.

“DNL is favorably positioned to capture opportunities emerging across the chemicals and specialty chemicals landscape. We expect 16 percent CAGR revenue growth and 27 percent CAGR PAT growth over FY19-24E. We assign a ‘Buy’ rating to the stock. Going ahead, we expect DNL to benefit strongly from the healthy outlook for the India chemicals industry, which is growing at 8-10 percent annually,” the brokerage said.

Other players on the list came from trading, rubber and plastic products, consumer foods, breweries and distilleries, real estate, pharma, cement and agriculture sectors, among others.
Black Rose Industries, which posted a 113 percent YoY rise in net profit in Q2, rose from Rs 2.10 in 2009 to Rs 81 as of November 22, 2019. Cupid, Kingfa Science & Technologies, DFM Foods, Shervani Industrial Syndicate, Associated Alcohols, Suven Life SciencesNSE 1.28 % and Venky’s India gained 1,000-2,700 percent in the last 10 years.

Kolkata-based investors Soumya Malani and Arun Mukherjee in a recent note said Kingfa is set to report the highest annual sales and profits since inception this financial year.

“Anything that can do so well under such slowdown only showcases what it can do when the sentiments change for good. We remain positive on the future prospect of the company,” they wrote.
Among the established names, shares of Indraprastha Gas jumped 1,125 percent and those of Shree CementNSE -0.19 % 1,088 percent since November 23, 2009.

Shares of Venky’s India, Shervani Industrial Syndicate, Cupid, Kingfa Science, Associated Alcohol are still down over 50 percent from their respective all-time highs, while Alkyl Amines is short of its record high by 5 percent, IGL, and Suven Life Sciences by 8 percent each.

KR Choksey Shares and Securities earlier this month gave a ‘buy’ recommendation on Indraprastha Gas (IGL) with a price target of Rs 498.

“We continue to be positive on the long-term performance of the stock, with IGL being a strong player in city gas distribution (CGD) segment. Rising environmental concerns in the NCR region will likely lead to encouraging conversions of automobiles creating higher demand,” the brokerage said.

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