Hidden Gem: This multibagger micro-cap company to raise funds for expansion, debt reduction, and EV subsidiary investment!

The stock is up by 60 per cent in just 1 year and gave multibagger returns of over 450 per cent in 3 years.

Kinetic Engineering Limited, the flagship company which completed 50 years recently seems to be very bullish on the future. The company, in its recently concluded board meeting, has approved the raising of over Rs 54 crores from various available sources including promoters & sale of its non-core assets. Accordingly, the board approved the issue of 22.85 lakh equity shares on a preferential basis, to promoters & promoter group companies totalling Rs 26.27 crore at a price of Rs 115 per share (including a premium of Rs 105 per share).

This is the 3rd year in a row that promoters have increased their stake in the company, which will stand at 59.35 per cent. In addition to the same, the board further approved Optionally Convertible Cumulative Preference Shares (OCCPS) totalling Rs 2.18 crore to Jayashree Firodia Trust, part of the promoter group. In this manner nearly Rs 28 crores shall be raised by the company through equity, significantly increasing its Net Worth. In addition, the board also approved the sale of excess land parcels of the company at a consideration of Rs. 25.50 Cr, after following due process including valuation done by a Registered Valuer.

Speaking on this big development, Mr. Ajinkya Firodia, Managing Director, Kinetic Engineering Limited, said “KEL has completed its restructuring of auto-components & turned around its operations over the past 3 years and achieved continuous growth in Net Profit during the last couple of years. Now we strongly believe the time has come to cash in on all the efforts, learnings & opportunities that lie ahead in our current business & future potential. We would like to utilize these funds for three main goals:

• Build a healthy balance sheet by further reducing debt of Rs 18 crore.
• Build a strong auto-component business by revamping our facilities, investing in new equipment, investing for new business and in working capital & capex in KEL to the tune of Rs 13 crore to Rs 15 crore.
• Build a strong future in EV by capitalizing its subsidiary company, Kinetic Watts & Volts Ltd. (KWVL), with an additional equity of Rs 22 crore to Rs 23 crore.”

“The opportunities are huge. The time is ripe. So, we are moving ahead confidently to make it happen. After all, all Kinetic stakeholders, deserve the best,” added Mr. Firodia.

On Tuesday, shares of Kinetic Engineering Limited zoomed 5 per cent upper circuit to Rs 118.30 per share from its previous closing of Rs 112.70. The shares of the company saw a spurt in volume by more than 4.09 times on BSE.

The company has a market cap of Rs 235.14 crore and reported amazing numbers in its Quarterly Results and annual results. The stock is up by 60 per cent in just 1 year and gave multibagger returns of over 450 per cent in 3 years. Investors should keep an eye on this micro-cap stock.