Dark horse stocks of the day: Nelcast jumps 20% in a weak market

Shares of Nelcast Limited witnessed a significant surge today. The stock opened trading at Rs 120.65, a 1.2% decrease compared to the previous day’s closing price of Rs 122.15 per share on the BSE. Despite opening lower than the previous day’s closing price, it hit the upper circuit price limit of 20%.

As of writing this article, the stock is trading at Rs 146.55, which represents a 19.98% increase from its previous closing price. Moreover, it has reached a 52-week high price of Rs 146.55 per share on the BSE.

With a market capitalization of Rs 1275 crore, the stock has demonstrated outstanding performance in recent periods, yielding a 60% return in the last six months. Furthermore, it has generated an impressive multibagger return of 161% over the last three years.

On observing the daily candlestick chart of the company’s stock, it is evident that it engulfs more than 20 previous day’s trading candles on the daily time frame, depicting significant bullishness on the chart. What’s more, it is trading at all-time high levels, which we commonly refer to as the ‘blue sky zone.’ Most likely, it will reach significant levels of Rs 150 per share.

Here is the chart presentation on the daily time frame:  

Company Profile 

Nelcast Limited is an Indian-based manufacturer specializing in the production of ductile and grey iron castings. The company’s operations extend beyond India, encompassing North America, Europe, and Southeast Asia. It serves a prestigious clientele consisting of original equipment manufacturers (OEMs) and tier-1 customers across various sectors, including commercial vehicles, tractors, off-highway equipment, railways, and passenger vehicles.

With a combined installed production capacity of approximately 160,000 metric tons per annum, it offers a diverse range of products, including commercial components, tractor and farm equipment parts, off-highway and military components, railway components, SUV, and car parts, as well as powertrain components.

Furthermore, it operates three manufacturing facilities strategically located in Ponneri, Tamil Nadu, as well as Gudur and Pedapariya in Andhra Pradesh. These facilities are dedicated to the fabrication and production of a wide array of casting components.

Financial Performance:

In the June quarter of FY24, the company’s revenue from operations experienced a modest decline of 0.84% YoY, decreasing from Rs 295 crore to Rs 293 crore. The company reported an operating profit of Rs 19.34 crore, compared to Rs 19 crore in the corresponding quarter last year, resulting in an operating profit margin of 6.61%.

Meanwhile, the net profit of the company amounted to Rs 7.18 crore, a slight decrease compared to the profit of Rs 7.77 crore in the corresponding quarter last year. In the last quarter of FY23, the company reported a net profit of Rs 4.48 crore.

The company’s ROE and ROCE stand at 9.6% and 6.60%, respectively. The price-to-book value ratio is 2.7 times, and the shares are trading at a price-to-earnings ratio of 43.8 times in the market.

Investors should keep an eye on this stock as it looks promising on the chart and could potentially outperform in the future.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.