FIIs-backed multibagger penny stock hits 10-year high; Company expects Rs 1,800 crore of revenue from distillery sector!

The stock is up by 80 per cent in just 1 year and gave multibagger returns of over 800 per cent in 3 years.

BCL Industries Ltd is a part of the Mittal group with a market cap of over Rs 1,400 crore. Today, shares of BCL Industries Ltd gained 8.63 per cent to a 10-year high of Rs 59.40 per share from its previous closing of Rs 54.68. The shares of the company saw a spurt in volume by more than 3.6 times on BSE. In September 2023, FIIs bought 4,21,073 shares or 1.66 per cent stake in this multibagger stock.

In a strategic move to enhance profitability and focus on high-margin segments, BCL has decided to reduce its emphasis on the edible oil business. The company will close down its Jalalabad unit and terminate the lease for the Bathinda edible oil unit. A portion of the Bathinda edible oil business will be integrated into the Bathinda distillery complex. Additionally, BCL has secured environmental clearance for a 150 KLPD ethanol expansion at the Bathinda distillery site. This expansion is expected to significantly reduce overheads and unlock the value of the Bathinda edible oil unit land.

The edible oil business contributes only 43.7 per cent to revenue and 10.9 per cent to EBITDA, indicating that it is not a major driver of profits. Moreover, the edible oil business has a substantial working capital requirement, which is anticipated to decrease with the shift in business strategy. This strategic decision is expected to free up management resources and allow BCL to focus on its high-margin distillery segment, where it is experiencing robust growth.

In July, the company successfully commissioned its dedicated 200 KLPD ethanol plant in Bhatinda, with the project's total cost amounting to around Rs 205 crore. BCL aims to enhance ENA and ethanol production to 700 KLPD by the end of FY-2024 and 850 KLPD by the end of FY-2026. The company expects that once our full distillery capacity is operational, we anticipate generating between Rs 1,700 crore and Rs 1,800 crore in revenue from this sector over the next two financial years.

Earlier, BCL Industries Ltd released its financial results for the second quarter results (Q2) and the first half (H1) of the fiscal year 2024. In Q2FY24, net sales increased by 6.2 per cent to Rs 480.71 crore, operating profit surged by 467.65 per cent to Rs 48.9 crore, and net profit skyrocketed by 2,499 per cent to Rs 19.67 crore compared to Q2FY23. For H1FY24, net sales rose by 9.7 per cent to Rs 909.38 crore, operating profit climbed by 124.3 per cent to Rs 90.16 crore, and net profit soared by 132.8 per cent to Rs 39.42 crore compared to H1FY23.

The shares of the company have a PE of 17x whereas the sectoral PE is 28.2x with a ROE of 18 per cent. The company has achieved impressive profit growth of 30 per cent CAGR over the past five years while maintaining a consistent dividend payout of 20.4 per cent.

The stock is up by 80 per cent in just 1 year and gave multibagger returns of over 800 per cent in 3 years. Furthermore, over the course of a decade, the stock yielded remarkable returns of 3,600 per cent to its investors.

Disclaimer: The article is for informational purposes only and not investment advice.