Multibagger Alert! HBL Power Systems climbed 228% in a year; up 1463% in last three years

HBL Power Systems, a leading battery and power systems company, has become one of the biggest wealth creators for investors in the last year. During this period, the stock has skyrocketed from a trading price of ₹78.90 apiece to ₹258.75, yielding a remarkable 228% return.

For long-term investors, the stock rewarded even more impressively as it delivered a whopping return of 1463% over the last three years. The stock has consistently delivered positive returns in CY20, CY21, and CY22, generating 160%, 53%, and 162% returns, respectively.

In the current year so far, the stock has risen by 169%, climbing from ₹105.95 to ₹258.75. On August 18, the stock jumped over 4.3% to hit a new all-time high of ₹268 apiece.

HBL Power Systems is engaged in the design, development, and manufacturing of specialised batteries and electronic solutions. The company is also engaged in service activities related to its products. The company operates its business under three primary verticals: battery, electronics, and defence.

It is the world’s second-largest Nickel-Cadmium battery manufacturer and India's third-largest telecom battery manufacturer, and the only Indian company with pure lead battery technology, as per the company's website.

Its flagship product in the electronic business vertical was the train collision avoidance system (TCAS), which addresses the issue of safety, and the train management system (TMS), which is designed for efficient track utilisation.

The company entered into a contract on June 26, 2023, with Ashoka Buildcon (ABL) for the supply of the Kavach part of an EPC contract won by ABL in September 2022.

The contract obtained by ABL from the East Central Railway involves a total value of ₹220 crore. This contract encompasses the deployment of the Kavach and OFC network across 417 km and 60 locomotives, connecting Pradhankhunta in Jharkhand and Deen Dayal Upadhyay station in Uttar Pradesh.

On the other hand, the contract between ABL and HBL amounts to ₹135 crore. This deal encompasses the supply and installation of all equipment related to the Kavach system, which requires approval from the Research Designs and Standards Organisation (RDSO), the company said in a regulatory filing.

For the June ending quarter, the company reported better-than-expected numbers, with its consolidated net profit growing by 160% to ₹51 crore compared to ₹20 crore for the same period last year. In the previous quarter, the company earned a net profit of ₹35 crore.

The consolidated revenue from operations during the same quarter surged to ₹467 crore, a growth of 46% YoY. The company's industrial batteries segment, which contributes 70% of the company's revenues, grew by 51% YoY to ₹324 crore.

During the June quarter, FIIs raised their holdings to 2.6% from 0.9% in the preceding March quarter. As of June 31, 2023, the majority of the company's stake is held by promoters at 59.1%, while regular shareholders own 38.1%.

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