Hitting upper circuit since June this textile stock turns multibagger in 1 month

Hitting upper circuit since June this textile stock turns multibagger in 1 month

Market


Considering the stocks that provide more than 100% return in a short period of time, multibagger stocks attract equity investors during a downturn in the market. In spite of the sell-off in the domestic equity market, some multibagger stocks have better returns than average, which causes the CAGR in stock price movement to be significantly higher. Baroda Rayon Corporation is one of the multibagger stocks that has delivered multiple times returns in a short period of time and is also approaching the upper circuit since June 1, 2022, despite market instability and significant price declines in the domestic market throughout the current year.

Share price history of Baroda Rayon Corporation Ltd

The shares of Baroda Rayon Corporation approached the upper circuit limit on 1st June 2022 from the level of 4.50 and on Friday the stock hit an upper circuit of 11.04 up by 4.94%. As per the data of BSE, the last quantity traded was 710 by volume. The stock has risen from 5.11 to the current level during the past five years, representing a multibagger return of 116.05 per cent. The stock’s multibagger return over the last year was 137.93 per cent, as the price rose from 4.64 to its current level of 11.04. Year-to-date (YTD), the stock has generated a multibagger return of 137.93 per cent so far in 2022, and during the past six months, it has maintained this return at a consistent level. The stock has increased from a price of 5.36 on June 6, 2022, to its current price during the past month, representing a multibagger return of 105.97 per cent. Baroda Rayon is trading above the 5-day, 20-day, 50-day, 100-day, and 200-day moving averages at the level of 11.04, which is a new 52-week high for the price. The stock has increased by 15.60 per cent during the previous five trading days.

Key takeaways of Baroda Rayon Corporation

The textile industry is the focus of Baroda Rayon Corporation, a small-cap company with a market valuation of 25 Cr. The company is based in Surat City of Gujarat and the company deals in products such as Viscose Filament Yarn with a manufacturing capacity of 15000 MT/PA, Carbon Disulphite (CS2) Plant with a capacity of 3960 MT/PA, Sulphuric Acid with a capacity of 21600 MT/PA, Nylon Yarn with a capacity of 6000 MT/PA, Polyester Yarn with a capacity of 19000 MT/PA and Nylon Tyre Cord with a capacity of 4000 MT/PA. 

The stock’s new 52-week high was at 11.04 on July 1, 2022, and its 52-week low was at 4.42 on June 1, 2022, meaning that it is now trading 149 per cent above its 52-week low. The company has reported good annual EPS growth of 163.49 Cr for the quarter ending March 2022. The ROCE has increased since March 2018 and is now at 147.19 Cr FY-22, up from 2.61 Cr in the same quarter of 2018. This suggests that the firm is effectively utilising its capital to create profitability. The ROE for March 2022 was 1,498.92 Cr, which is the highest to date, indicating that the firm effectively utilises its shareholders’ equity to create income. 

The company’s promoter holding, which has been steady since June 2019, is 47.54 per cent, and the public shareholding, which has remained constant since the same period, is 50.97 per cent. The firm reported a debt-to-equity ratio for the quarter ended March 2022 of 11.81 times, the highest level recorded to date. This makes the company one of those with excessive debt, and it also has a weak net cash flow of 1 Cr, which may be attributed to a gap in the earnings. In comparison to its competitors, including Grasim Industries, Pasupati Acrylon, Vardhman Acrylic, Filatex India, and others, the firm has a low PE of 0.07. Baroda Rayon Corporation is selling at a low EV/EBITDA ratio of 0.87x and a PB of 1.01 times its book value per share of 10.91 at the current market price of 11.04 when compared to its rivals.

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