Shareholders of Tube Investments of India are ecstatic with its remarkable performance over the past ten months as the stock witnessed a surge from ₹1,487.50 apiece to the current trading price of ₹2,664, resulting in a substantial return of 79.15%.
Over the last three years, the stock has soared from ₹316.20 apiece to the current level, ascending to the tune of nearly 742.50% during this period.
Investors who held the stock for the long term saw significant gains, as it generated a return of almost 1100% over the past five years, rallying from ₹221.75 apiece to ₹2,664. During this period, an investment of ₹one lakh would have turned into over ₹12 lakh currently.
In addition, the stock has demonstrated a consistent track record of delivering positive annual returns over the past five years. In CY18, CY19, and CY20, it yielded a return of 32%, 35.19%, and 66.29%.
The trend continued with remarkable returns of 119% in CY21 and 58.17% in CY22, showcasing the stock's impressive performance over time.
Tube Investments, part of Murugappa Group, is one of the leading Indian manufacturers that specializes in a diverse range of products catering to various industries, including automotive, railway, construction, mining, and agriculture. The company primarily operates through three key divisions; engineering, metal formed products, and bicycles.
Murugappa Group is one of India's leading business conglomerates. The group has 29 businesses, including ten listed companies traded on Indian stock exchanges.
Renowned brands like BSA, Hercules, Montra, Mach City, Ballmaster, Ajax, Parry’s, Chola, Gromor, Shanthi Gears, and Paramfos are from the Murugappa stable.
In the quarter ending in March 2023, the company's standalone net profit experienced a remarkable increase of 84.55%, reaching ₹251 crore. This significant growth was primarily driven by a substantial rise in other income, which surged by 273% year-on-year to ₹142 crore in Q4.
For the financial year ending March 2023, the net profit was up by 40% to ₹665 crore and in the same period revenues increased by 13.80% to ₹7,236 crore.
The company experienced a slight uptick in revenues across its key business segments during the quarter ended in March. Volumes grew in the high single digits, but the pass-through of deflationary RM costs hurt revenue growth, the company said.
Raw material prices moderated in 2Q/3QFY23, and this decline was passed onto the customers in 4Q, resulting in lower revenue (for both engineering and metal formed business), it said.
The engineering segment, which contributed more than 60% to the company's revenues in Q4, recorded a marginal increase of 1.35% YoY to ₹1,044 crore, while the revenue from its metal formed product business grew 3.27% YoY to ₹347 crore in Q4.
The revenue from the mobility business declined 38% YoY to ₹55 crore, adversely impacted by continued pressure on the domestic cycle business.
The company said that the bicycle industry continues to suffer from a contraction in demand, and its bicycle business worked towards cost reduction and improving operational efficiency through kaizen improvements.
Going forward, brokerage firm Motilal Oswal said that the company offers diversified revenue streams with strong growth in the core business. The brokerage has reaffirmed its 'buy' tag on the stock with a target price of ₹3,300 apiece, signalling an upside of nearly 24% from the stock's latest closing price.
05 analysts polled by MintGenie on average have a 'buy' call on the stock.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.