Multibagger Shivalik Bimetal Controls zooms 2271% in 4 years: Should you buy?

However, recently, the banal has exhibited sizeable volatility. It has declined by 5 percent implicit the past 1 twelvemonth but has shown a 7 percent summation successful 2024 year-to-date.

It has jumped astir 17 percent successful 2024 YTD, aft a 12 percent autumn successful May. Before that, it roseate 10.6 percent successful April but shed 3.8 percent and 8.3 percent successful March and February, respectively. In January 2024, the banal roseate 7 percent.

The banal deed its highest of ₹730 connected July 17, 2023, and its 52-week debased of ₹460.90 connected June 4, 2024. Currently trading astatine ₹585.65, the banal is 20 percent distant from its highest but has precocious 27 percent from its twelvemonth low.

Despite the caller volatility successful the stock, brokerage location JM Financial has initiated sum connected Shivalik Bimetal Controls with a bargain standing and a people terms of ₹730, implying a 20 percent upside potential. JM Financial believes that Shivalik, arsenic a niche player, is well-positioned to capitalize connected manufacturing opportunities.

The brokerage noted that Shivalik Bimetal, predominantly a bimetal and electrical contacts manufacturer, ventured into the shunt resistor concern successful 2014-15. It has since gained dominance successful the home marketplace and is present poised to further grow its export opportunities, with superior expenditure already completed and capableness successful place. Shivalik is strategically positioned to capitalize connected 3 cardinal opportunities: the switchgear industry, astute metering, and electrical vehicles (EVs).

The institution besides aims to summation its gross publication from electrical contacts from the existent 10-11 percent done inorganic enlargement and by tapping into planetary markets. Additionally, Shivalik Bimetal Controls (SBCL) benefits from a product-linked inducement (PLI) strategy for shunts and is continually exploring caller industries for its shunt applications, including mobile, telecom, and renewables.

JM Financial's sum and optimistic people terms bespeak assurance successful Shivalik's maturation prospects, driven by its strategical ventures and marketplace enlargement plans.

Overall, the brokerage expects Shivalik Bimetal Controls to execute a compound yearly maturation complaint (CAGR) of 25 percent successful Revenue, 29 percent successful EBITDA, and 29 percent successful PAT implicit FY24-26E. They task a Return connected Capital Employed (RoCE) of 30.4 percent and a Return connected Equity (RoE) of 24.1 percent by FY26E.

The brokerage further highlighted that a bulk of Shivalik Bimetal Controls' income are customized, with accumulation parameters and instrumentality tailored accordingly. Customers typically put successful the tooling kit, and astir 75 percent of the company's products are custom-made for circumstantial lawsuit requirements. Remarkably, Shivalik has maintained beardown lawsuit loyalty, arsenic nary lawsuit has near the institution successful the past decade. This semipermanent lawsuit retention underscores the company's estimation for reliability and prime successful its specialized manufacturing offerings, it noted.

JM expects Shivalik’s shunt gross volition spot a CAGR of 30 percent implicit FY24-26E with an EBITDA borderline of 23 percent successful FY25 and 24.2 percent successful FY26. For the Electrical contacts segment, JM anticipates a robust CAGR of 37 percent implicit FY24-26E for this segment, with EBITDA margins projected to beryllium astir 11.5 percent to 12 percent. Meanwhile, successful the bimetal segment, JM estimates export opportunities to thrust growth, projecting an wide Compound Annual Growth Rate (CAGR) of 17 percent implicit FY24-26E. They expect the conception to execute an EBITDA borderline of astir 22.9 percent during this period.

Disclaimer: The views and recommendations made supra are those of idiosyncratic analysts oregon broking companies, and not of Mint. We counsel investors to cheque with certified experts earlier taking immoderate concern decisions.

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Published: 28 Jun 2024, 10:56 AM IST