Multibagger penny stock: Investing in the stock market is not as easy as it looks and requires patience along with a well-planned strategy to make profits. Investors who spot potential companies and stay invested for longer periods have the tendency to enjoy larger profits. In contrast to short-term investors, who eye quick profits, long-term investors understand the value of remaining invested in companies with strong fundamentals, significant growth potential, and a leading position in their industry.
One such stock is Transformers and Rectifiers (India), which has consistently delivered exceptional returns to its long-term shareholders by sustaining a steady growth trend year after year.
Transformers & Rectifiers India (TRIL) is one of the leading transformer manufacturers in India, with a total installed capacity of 37,200 MVA across its facilities in Gujarat—Odhav (1,200 MVA), Changodar (12,000 MVA), and Moraiya (24,000 MVA). This capacity can be expanded to 42,000 MVA without additional capital expenditure through repeat design orders, as the throughput time for such orders is 20% shorter, and the company currently handles a significant number of them.
₹5.21 to ₹855 – Multibagger returns
Over the past five years, the manufacturing company’s stock has surged multifold from ₹5.94 to ₹855, gaining 9,655.14 per cent on the Bombay Stock Exchange (BSE). The multibagger penny stock ended on 27th March 2020 at ₹5.21 during the COVID-sell-off. Still, it rebounded strongly after bottoming out at the end of 2020, and today, it is finding no seller while quoting at around ₹855 apiece, rising nearly 164 times in this five-year period.
So, if a positional long-term investor had invested ₹1 lakh in this penny stock five years ago while bottom fishing at the end of March 2020 and had remained invested throughout this period, his ₹1 lakh would have turned into ₹1.64 crore ( ₹1 lakh x 164) in this time horizon.
In the short term, the stock has failed to attract investor interest. It has dropped by nearly 28.72 per cent over the past month but has gained more than 165% over the past year.
On January 8, Transformers and Rectifiers stock hit an intraday high of ₹1,247.50. However, the rally was short-lived as the stock fell below the ₹1,000 mark on January 15.
Financial performance
In the December quarter, Transformers and Rectifiers reported a net profit of ₹55 crore, a significant rise from ₹15.6 crore in the same period last year. The profit growth was partly supported by a ₹7 crore increase in other income.
The company’s revenue for the quarter surged 51.5 per cent year-on-year to ₹559.4 crore.
EBITDA rose to ₹84.8 crore from ₹35.6 crore in the previous year, while the EBITDA margin improved to 15.2 per cent from 9.6 per cent.
Last month, the board of Transformers and Rectifiers (India) approved the issuance of bonus shares in a 1:1 ratio. Additionally, the board authorised the company to raise ₹750 crore through a qualified institutional placement.
