Multibagger Alert! From ₹1.40 to ₹59.85, Paramount Communications jumped 4175% in a decade

Paramount Communications shares were locked in the 5% upper circuit at ₹59.85 apiece for the second straight day after the Indian government approved 40 railway projects worth ₹95,704 crore on Monday, according to media reports.

The company, with its presence in railway cable manufacturing, which includes signalling cables and railway power axle counter cables, is likely to benefit from the increased capital expenditure by the railways.

During Union Budget 2023-2024, the government announced a capital outlay of ₹2.40 lakh crore for the Indian Railways, the highest ever outlay and about 9 times the outlay made in 2013-14.

Amidst this backdrop, the company's shares have been making noteworthy gains. In the current year, the shares have surged by about 72%, extending the positive trend seen over the past two years, during which the shares registered a remarkable growth of 150% in CY22 and 83.55% in CY21.

Over the last decade, the shares have grown exponentially, spiking from a trading price of a mere ₹1.40 to the current market price of ₹59.85, leading to a staggering gain of 4175%.

Out of the last 10 years, the shares ended six positively and four in the red. The shares require only a 6.19% increase from current levels to achieve their all-time high of ₹63.40 apiece, which was last achieved in 2008.

Paramount Communications Ltd., part of the Paramount Cables Group, is one of India’s leading wire and cable manufacturing company. With over six decades of operations, the group has built up a portfolio spanning a comprehensive range, including HV & LV power cables, optical fibre cables and other telecom cables, railway cables, specialised cables, instrumentation and data cables, and fire survival cables.

The company has a prestigious clientele that includes government, institutional, and major private sector organisations, both national and international, in the power, telecom, railways, I.T. and communication, construction, defence, and space research sectors, among others.

Further, the company has a strong export base and has executed orders for reputed international corporations and agencies in various countries.

For the June quarter, the company reported a revenue of ₹211 crore, an improvement of nearly 28% over the ₹164 crore of revenues reported in the same period last year. The operating profit during the same quarter jumped 53% YoY to ₹17 crore, and the operating profit margin came in at 8%, an expansion of 300 basis points from 5% posted in Q1FY23.

The consolidated net profit after tax in Q1FY24 stands at ₹15 crore as compared to a net profit of ₹7 crore in Q1FY23, which is an increase of 114%. As a result of growth in net profit, the company's EPS improved to ₹0.65 in Q1 FY24 from ₹0.36 in the same period last year. For the full fiscal year 2022-2023, the company saw its net profit surging by 500% to ₹48 crore over FY22's net profit of ₹8 crore.

The promoter owns 63.9% of the shares in the company at the end of Q1FY24, while foreign portfolio investors own 0.9%. Regular shareholders held 35.2% stake in the company.

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