From ₹34 to ₹968: This Birla group stock rallied 2,700% in 2021

The Indian equities have witnessed a strong rally since the coronavirus-led market crash in March 2020. Since then, a large number of shares have entered the list of multibagger stocks, delivering skyrocketing returns to investors. One such stock is Xpro India that has rallied more than 2,700% this year as compared to a 21% gain in benchmark index BSE Sensex, which measures the market capitalisation of the country’s top 30 stocks.

Xpro India, a Birla group company, has emerged as one of the best multibagger stocks in 2021, thanks to its robust financial performance and its dominance in the polymer processing industry. The diversified multi-divisional company is the only firm in India that manufactures packaging material for capacitors and liners for refrigerators. There is hardly any competitor in this capital-intensive business.

This smallcap stock turned multibagger in one year

The polymer processing company saw its shares surging from ₹33.75 to ₹968 per share since the beginning of this year (year-to-date basis), delivering an astonishing return of 2,768% to its shareholders in this period. The stock price has gained 450% in the last six months and 28% over one month period.

The smallcap stock has also given stellar returns over the long term period, rising 4,200% in two years, 2,350% in three years, and nearly 2,000% over last five years.

On Wednesday, Xpro India shares gained 1.4% in early trade to hit a high of ₹968 against the previous close price of ₹954.45 on the BSE. The stock was trading 0.4% lower than its 52-week high of ₹1,015, touched on December 8, 2021. It hit a 52-week low of ₹32.55 on December 30, 2020. The market capitalisation of the company currently stands at ₹671 crore.

The stock price has been moving higher for the past 3 sessions and has climbed 2.58% in the period. The share was trading higher than 5-day, 20-day, 50-day, 100-day and 200-day moving averages, according to stock research platform Markets Mojo.

As per the analyst platform, Xpro India share is technically in a bullish range, with trend improving from mildly bullish on November 23, 2021, at ₹727.30, and has generated 31.31% returns since then.

Xpro reports positive results for last five consecutive quarters

The company has consistently reported robust earnings and has declared positive results for the last five consecutive quarters. However, its low ability to pay debt remains a cause of concern for investors. Xpro has a high debt to EBITDA ratio of 4.21 times, which indicates that the company might face difficulties in servicing its debts.

For the second quarter ended September 2021, the Birla group company reported a 105.7% growth in its net profit at ₹10.84 crore as against ₹5.27 crore during the same period last year. Net sales grew 29.6% to ₹126.55 crore in Q2 FY21, compared to ₹97.66 crore during the previous corresponding quarter.

Last month, India Ratings and Research (Ind-Ra) assigned a long-term issuer rating of ‘IND BBB’ to the stock, with a positive outlook. The positive outlook was attributed to improvement in the company’s credit metrics due to a reduction in the overall debt. The overall debt of the company declined to ₹135.2 crore on March 31, 2021, from ₹168.1 crore at end of March 2020, on account of a repayment of a long-term, along with lower reliance on short-term borrowings.

Xpro enjoys strong presence in polymer processing industry

Xpro India is a strong player in the polymer processing industry operating three manufacturing facilities located across India with two operating divisions – Biax and Coex.

As per the management, the company is the only manufacturer of dielectric films in India (Biax division) and has a market share of about 33% in the domestic market besides exports. XIL is also one of the leading players in the coextruded cast films and sheets (Coex division), with a market share of over 70%. In FY21, the company generated 70% of its revenue from Coex division while the balance was contributed by the Biax division.