Elgi Equipments, a leading manufacturer of air compressors and related equipment, saw its shares gain over 14% in Wednesday's trade. This significant jump in the value came after the company received a Letter of Award from Siemens Limited for the supply and maintenance of Air Generation and Treatment Units and Aux Compressors.
"The order is required to be executed by the Company over a period of 10 years of supplies and 35 years of maintenance from the date of supply. The Letter of Award is, however, subject to the signing of the contract," the company said in a regulatory filing.
The shares reacted positively to this development, opening at ₹559 apiece, which is higher than their previous closing value of ₹546.50, and climbed further to reach a new all-time high of ₹623 apiece, representing a significant increase of 14.20%.
From their March 2020 low of ₹52 apiece, the shares have skyrocketed 1080% to trade at the current level of ₹614 apiece. Impressively, the shares have consistently delivered positive returns year after year.
In CY20, they gained 19%, and in CY21 and CY22, the rally continued with impressive gains of 95.49% and 40.25%, respectively. The upward momentum has carried into the current year as well, with the shares already up by 45%.
Elgi Equipments is a small-cap stock with a market capitalisation of ₹19,521 crore. The company manufactures a wide range of air compressors, and it is the second largest player in the Indian air compressor market with a 22% market share and among the top eight players globally.
For FY23, the company witnessed a surge in net profit, which rose by 108.42% to ₹371 crore compared to ₹178 crore in FY22. Its sales increased by 20.43%, reaching ₹3,041 crore in FY23 as compared to ₹2,525 crore during the last fiscal year.
Elgi Equipments reported stronger-than-expected performance in North America and Europe, while the other regions also showed improvement compared to the previous year.
Domestic brokerage firm ICICI Direct Research in its May research note, said that the company is likely to report a strong revenue CAGR of 16% in FY23–25, led by the air compressor business with new customer additions and higher margin orders with a strong balance sheet.
03 analysts polled by MintGenie on average have a 'sell' call on the stock.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.
