Vijay Kedia upped stake in this multibagger in Q1

New Delhi: Seasoned investor Vijay Kedia has upped his stake in multibagger Elecon Engineering Company in the June quarter, according to the latest shareholding pattern.

Data showed Vijay Kishanlal Kedia held 20,75,000 shares or a 1.85 per cent stake in the company as of June 30, up from 13.39,713 shares or 1.19 per cent stake in the previous quarter.

Kedia was seen raising his stake in the company even as the scrip soared 126 per cent in the last one year and 429 per cent in the last five years.

This year alone, the scrip has risen 63 per cent. He had also bought some additional shares in the company in the March quarter.

Elecon is one of the largest manufacturers of MHE and industrial gears in Asia, with a global presence in the US, UK and European countries. The company primarily operates in two business segments: Transmission equipment (TE) and material handling equipment (MHE).

The stock rose 1.21 per cent to Rs 313.55 apiece on Monday morning.

Industrial gears accounted for 89 per cent of the company’s FY22 sales with an EBIT margin of around 20 per cent. Due to a higher share in the mix, this segment is now the major earnings driver unlike the past cycle when MHE (project based) meaningfully contributed, said in a recent note.

The management expects standalone revenue to touch Rs 1,500 crore by FY24 from Rs 884 crore in FY22, driven by growth in industrial gears. Edelweiss expects the gears division, including international subsidiaries, to record a revenue CAGR of 21 per cent over FY22-25E.

The brokerage recently assigned a 'tactical buy' on this stock considering the cyclical nature of the business, the company is at Rs 374 per share, based on 18 times FY24E PE multiples. The target suggests a 19 per cent potential upside on this stock over Monday's intraday price.

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