4:1 Bonus Share, FIIs increase stake & Rs 2,326 crore order book: Multibagger engineering stock to watch out for tomorrow as company announces a big acquisition update

The stock gave multibagger returns of 145 per cent in 1 year and a whopping 1,000 per cent in 5 years.

Salasar Techno Engineering Limited (STEL) has finalized the acquisition of M/s EMC Limited (under liquidation) in a "as is" condition, meaning STEL takes EMC exactly in its current state with no guarantees or ability to seek recourse later. This acquisition, completed in accordance with the liquidation process, makes EMC a functioning business under STEL's ownership. The remaining balance of Rs 168 crore has been paid to finalize the deal, which was initiated through an e-auction and officially confirmed by a Sale Certificate from the Liquidator. This move signifies a major step for STEL in its plan to broaden its market reach and capabilities.

STEL, established in 2006, acts as a single source for customized steel infrastructure solutions in India. They offer comprehensive engineering, design, fabrication, galvanisation, and installation services. Their product range includes various towers (telecom, power transmission, lighting, etc.), substations, solar structures, railway electrification components, bridges, and custom steel structures. Additionally, STEL acts as an EPC contractor, undertaking complete project management for rural electrification, power lines, and solar plants. The company has an order book of Rs 2,326 crore as of December 31, 2023. 

Additionally, The Board of Directors approved converting 3,25,00,000 fully convertible warrants held by Coeus Global Opportunities Fund (a non-promoter public category investor) into the same number of equity shares. The conversion price is Rs 14.40 per share (including a premium of Rs 13.40), with Coeus already paying Rs. 3.60 per warrant (25 per cent upfront cost) upon allotment in April 2024. This final payment of Rs. 10.80 per warrant (75 per cent balance) brings the total investment to Rs 35,10,00,000. Following this conversion, the company's issued and paid-up capital increases to Rs 172,67,70,290 and Coeus will now hold 3,25,00,000 equity shares, representing 1.88 per cent ownership.

Also Read: An FII-Eminence Global Fund PCC is allotted 15,00,000 equity shares on conversion of warrants of this solar product and EV chargers manufacturing company!

Earlier to this, the company secured two major contracts. In a joint venture with Rail Vikas Nigam Ltd (RVNL) where STEL holds a 49 per cent stake, they won a Rs 173.99 crore project from Madhya Pradesh Power Transmission Company Limited (MPPTCL). Additionally, STEL secured a significant Rs 1,033.78 crore contract from Tamil Nadu Generation and Distribution Corporation Limited (TANGEDCO).

According to Quarterly Results (Q3FY24), the net sales increased by 26.32 per cent to Rs 304.35 crore and net profit increased by 56.75 per cent to Rs 167.10 crore compared to Q3FY23 while in nine-month results (9MFY24), the net sales increased by 18.43 per cent to Rs 841.10 crore and net profit increased by 40.89 per cent to Rs 35.96 crore compared to 9MFY23. As of April 2024, promoters own 58.76 per cent, FIIs own 6.27 per cent and the public owns 34.95 per cent.

The company issued bonus shares in a 4:1 ratio to its shareholders on February 1, 2024 (ex-date). This means that for every one share a shareholder held, they received four additional shares. The stock gave multibagger returns of 145 per cent in 1 year and a whopping 1,000 per cent in 5 years. Investors should keep an eye on this Small-Cap stock.

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