From ₹393 to ₹1,200: This stock tripled investor wealth in one year

Shares of Centum Electronics surged as much as 17% intraday on Thursday to hit a new all-time high of ₹1,200 on the BSE, driven by strong volume trade. The smallcap stock has rallied more than 48% in the last four sessions as compared to 1.8% rise in the S&P BSE Smallcap index and a 0.1% fall in the BSE benchmark Sensex during the same period.

The aerospace engineering company has gained traction in recent times and particularly, after the company released its March quarter earnings that topped Street estimates, aided by a healthy order book.

On Thursday, Centum shares opened 1.85% higher at ₹1,048.90 against the previous closing price of ₹1,029.80 on the BSE. Extending opening gains, the counter zoomed as much as 16.5% to hit a new high of ₹1,200, with 23,000 shares changing hands over the counter compared to two-week average volume of 7,605 scrips. Finally, the stock settled at ₹1,112.45, up 8.03% on the BSE.

With a market capitalisation of ₹1,433 crore, the counter has given 58% returns in the calendar year 2023, while it jumped over 51% in a month.

The stock has been on an upward trajectory, climbing from its 52-week low of ₹393.15 touched on July 5, 2022, to its current high of ₹1,200 per share, registering a massive growth of 205% in the span of just eleven months. In simple terms, an investment of ₹1 lakh in this stock would have become over ₹3 lakh in less than a year.

Founded in 1993, Centum Electronics (Centum) is one of the largest Electronics System Design and Manufacturing (ESDM) companies in India. The company offers an entire spectrum of design services and manufacturing of systems, subsystems for mission critical products in defence, space, aerospace, industrial, transportation and medical sectors. It has three businesses - Electronic Manufacturing Services (EMS) segment, Engineering R&D (ER&D) Services, and Build-To-Specification (BTS), which contribute 39%, 32%, and 29%, respectively, to the total revenue.  

For the March 2023 quarter, the company posted a consolidated profit after tax at ₹25.8 crore, against a loss of ₹6.4 crore in the year ago period. The consolidated revenue from operations grew 60% on Q-o-Q basis and 35% on Y-o-Y basis to ₹316.3 crore, supported by broad-based performance from all business units. “Delivery of certain long gestation projects in the BTS Space segment was a major contributor to Q4 revenue,” the company said.

On the operational front, consolidated EBITDA rose significantly by 56.7% to ₹50.3 crore due to higher revenue as well as better mix from BTS. The margin improved by 213 basis points to 15.9% in Q4FY23.

The company in its earnings report said that continued focus on debt reduction at its French subsidiary has resulted in consolidated debt equity ratio improvement to 1.29 at the end of FY23 as compared to 1.37 in FY22. Standalone Debt Equity ratio for FY23 stood at 0.37 – same as previous year and Net working capital improved to 140 days compared to 175 days in FY22.

Centum’s order book grew to ₹1,538 crore as on March 31, 2023 as compared to ₹1,440 crore at the end of Q3 and ₹1,090 crore at the end of FY22, largely driven by new business from new and existing customers in EMS. 

The board of the company also recommended a final Dividend of ₹4 (40%) per equity share of ₹10 each, subject to approval of shareholders in the ensuing annual general meeting of the company.

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