Ashish Kacholia’s portfolio multibagger stock & FIIs increase stake: This forging company reports stellar quarterly results & nine-month results; PAT zooms 176 per cent!

The stock gave multibagger returns of 235 per cent in just 1 year whereas BSE Small-Cap Index is up by 64 per cent.

Balu Forge Industries Ltd is engaged in the manufacturing of fully finished and semi-finished forged crankshafts and forged components. It can manufacture components conforming to the new emission regulations & the new energy vehicles.

The company announced its Quarterly Results (Q3FY24) and nine-month results (9MFY24) for the fiscal year 2024. According to quarterly results, the revenue from operations increased by 55.7 per cent to Rs 147.1 crore, EBITDA increased by 72.1 per cent to Rs 32.71 crore and profit after tax (PAT) increased by 103.2 per cent to Rs 25.45 crore in Q3FY24 compared to Q3FY23. According to nine-month results, the revenue from operations increased by 96.5 per cent to Rs 398.68 crore, EBITDA increased by 191.1 per cent to Rs 84.74 crore and profit after tax (PAT) increased by 176.2 per cent to Rs 65.39 crore in 9MFY24 compared to 9MFY23.

The management believes that revenue is expected to conservatively grow in the range of 40 per cent to 45 per cent in FY24 over FY23, led by new customer additions in sectors like defence, railway, sustainable green energy components and commercial vehicles by expanding its product range through R&D and strategic investments, transforming into a more integrated company to reach new clients, regions, and markets.

The EBITDA margins are expected to be in the corridor of 23 per cent to 24 per cent in the upcoming quarter on the back of the increasing scale of operations and efficiencies thereon. BFIL's client-centric approach, evident in new client acquisitions and the upcoming Mercedes Benz unit, positions it as a partner of choice and fuels its growth. This comprehensive strategy, including capacity expansion, technology adoption, innovation, and cost management, ensures BFIL's future readiness for sustained revenue growth and profitability.

An ace investor, Ashish Kacholia, owns a 2.11 per cent stake in this company at Rs 115.45 per share.  From Rs 115.45 per share to Rs 271.15 per share, he already made gains of 135.73 per cent for each share that he bought in July 2023. Additionally, FIIs have increased their stake to 8.77 per cent in December 2023 compared to 6.48 per cent in September 2023.

The company has a market capitalization of over Rs 2,749 crore and the shares of the company have an ROE of 22 per cent & an ROCE of 27 per cent. The stock gave multibagger returns of 235 per cent in just 1 year whereas BSE Small-Cap Index is up by 64 per cent. Investors should keep an eye on this small-cap stock.

Industry Outlook: The Indian metal forging market is expected to witness growth, increasing from USD 4.32 billion in 2022 to USD 8.80 billion by 2029, with a compounded annual growth rate (CAGR) of 10.69 per cent. Simultaneously, the global precision engineering machines market is anticipated to expand, projecting a size of USD 19.27 billion by 2028, compared to USD 12.33 billion in 2021.

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