Investing in the stock market has long been recognised as a pathway to potential wealth creation. One of the fundamental principles of investing in the stock market is the importance of time. The ability to identify and hold onto promising stocks over an extended period can yield significant returns.
Avantel was one such stock in this regard that produced a whopping return over the last decade. From a trading price of just ₹2.25 apiece ten years ago, the stock has seen a remarkable rise of 9588% to trade at the current level of ₹218.
To put this into perspective, if an investor had invested ₹one lakh into these shares a decade ago and held onto them until today, their investment would have ballooned to an astonishing ₹97 lakh.
What makes this achievement even more remarkable is the consistent annual performance of the stock. Over the last ten years, it concluded seven with gains. The standout year was CY14, when it delivered a remarkable return of 226%. This was followed by robust returns of 107% in CY21 and 116% in CY22. In the current year, Avantel's stock has surged by an impressive 180%, witnessing a substantial increase in value from ₹77.80 to ₹218.
The company's shares have been trading on an ex-split basis with a 1:5 ratio since August 16, 2023.
Avantel is a company engaged in the manufacturing of wireless front-end, satellite communication, embedded systems, signal processing, network management, software development, and rendering related customer support services.
Recently, on September 13, the company secured a supply order valued at ₹7.03 crore from the material organisation in Visakhapatnam. This order pertains to the supply of MSS TX-RX Terminals M-II. In August, the company also received an order worth ₹13.30 crore from Bharat Electronics Limited for the supply of PA modules.
Moreover, in July, Avantel received a purchase order worth ₹4.24 crore from Mazagon Dock Shipbuilders for the supply, installation, and commissioning of UHF SATCOM systems.
Turning to Avantel's financial performance, the company reported a consolidated net profit of ₹8 crore in Q1FY24, a notable increase compared to ₹4.40 crore in Q1FY23. In the preceding March quarter, it posted a net profit of ₹9.70 crore.
The consolidated revenue from operations reached ₹70 crore in Q1FY24, marking a YoY surge of 46% and a QoQ surge of 32%. The company's EPS (earnings per share) improved to ₹0.99 in Q1FY24 from ₹0.54 in the same quarter a year ago. Avantel's stock currently trades at a price-to-earnings multiple of 11.6x, considerably lower than the industry P/E of 31.1x.
From a financial ratio perspective, it has an ROE (Return on Equity) and RoCE (Return on Capital Employed) of 26.84% and 38.79%, respectively, in FY23.
Regarding ownership, the promoter holds a 40.1% stake in the company, while regular shareholders own 59.9%, according to Trendlyne shareholding data.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie. We advise investors to check with certified experts before taking any investment decisions.
