Elgi Equipments, a leading manufacturer of air compressors and related equipment, experienced a tremendous surge in its stock price, soaring by 29.7% in the last six trading sessions, climbing from ₹429.90 apiece to ₹557.50.
During this period, the market capitalization of the company increased by ₹3,956 crore, reaching ₹17,282 crore. This remarkable performance propelled the stock to trade close to its all-time high of ₹566 apiece.
In the previous trading session, the stock zoomed 18% after the company's Q4 performance exceeded analyst estimates, with net profit growing 138% YoY to ₹170 crore, aided by a significant surge in other income to ₹128 crore as compared to ₹16 crore recorded in Q4FY22.
Its revenue from operations surged 14.83% in the reporting quarter to ₹836 crore. The company's air compressor segment, which contributes more than 90% of the company's revenues, grew by 15.90% YoY to ₹773 crore.
While the revenue from its automotive business segment registered a growth of 5% to ₹63 crore. The company said its automotive business has performed well to register growth in sales and profitability.
During the quarter, the company improved its earnings per share to ₹5.37 from ₹2.31. In the October-December quarter, the EPS stood at Rs. 2.53.
Overall, for the financial year ending March 30, 2023, Elgi Equipments 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.
The company reported stronger-than-expected performance in North America and Europe, while the other regions also showed improvement compared to the previous year. Looking ahead, the company maintains a cautiously optimistic outlook in achieving its revenue targets for FY24.
Potential economic slowdowns in specific markets, as predicted by experts, and the possibility of conflicts could have a dampening effect on the company's prospects, it said.
Domestic brokerage firm ICICI Direct Research 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.
The brokerage remained optimistic about the stock and maintained its 'buy' recommendation with a revised target price of ₹565 apiece.
Elgi Equipments is a small-cap stock with a market capitalization of ₹17,225 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.
The company shares produced an exceptional gain of 982% from their March 2020 low of ₹52 apiece to reach an all-time high of ₹566 in September last year.
4 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.