PENNY STOCK PORTFOLIO V2.0: Vikas Ecotech is delivering 275% in 1.5 years
Vikas EcoTech was one of our stock pick from our Penny Stock Portfolio Version 2.0 which was released in June 2016. The stock was recommended at a price of Rs. 13 and it has recently touched a high of Rs. 48.50, up by 275% in a matter of our 1.5 years. Here is the stock performance –
RECO DATE: 20th JUN’16 RECO PRICE: Rs. 13 PEAK PRICE ON 4th JAN’18: Rs. 48.5
When we recommended the stock as one of the 10 stock picks from Penny Stock Portfolio V2.0, we had issued a Research Report. The report consisted of few reasons why we projected the company delivering such growth going forward. We would like to share the details of the report with you –
Excerpts from our Research Report issued on 20th June 2016
ABOUT THE COMPANY
Vikas EcoTech Limited is an India-based company engaged in the business of manufacturing and distribution of specialty polymers compounds and additives. The Company’s segments include Chemical Division, Real Estate Division, Agro Division, and Service Division.
The Company is engaged in the business of manufacturing and distribution of high-end products used in Agricultural Pipes, Auto Parts, Wires and Cables, Artificial Leather, Footwear, Organic Chemicals, Polymers, Pharmaceuticals and Packaging industries. The Company also distributes global conglomerates with function in specialty chemicals and polymers.
SHAREHOLDING IN THE COMPANY
REASONS WHY WE RECOMMENDED THE STOCK IN JUNE 2016
1. From last 5 years, the company’s sale CAGR is 20%. Company’s management is expecting a CAGR growth of 25% in next three years, from FY16-17 to FY18-19. Considering the topline growth, Vikas Ecotech is still trading at a P/E of 12 and P/Bv of 3 which is fairly valued as compared to its peers.
2. Company’s 80% revenue comes from manufacturing and 20% comes from trading including merchant trading. Since the profit margins in manufacturing activities are extremely high, the company will be focusing on increasing the manufacturing work. Going forward management is confident that the ratio will be 85:15.
3. They have recently expanded their capacities which have already started paying off. In addition to it, they are targeting more on exports. They have almost doubled their export during the current financial year.
4. Vikas Ecotech is investing heavily in R&D space because that increases their margins. Currently, EBITDA margins are 22% and management expects EBITDA will be 25% in FY17.
COMPANY PERFORMED AS OUR PREDICTIONS WE MADE IN JUNE 2016
The company had delivered Sales of Rs. 301 crores in fiscal end March 2016. We recommended the stock in June 2016 predicting the stock will be growing at 25% CAGR for next 3 years. The company then posted Sales figure of Rs. 375 crores in March 2017, registering a growth of 22%, very close to our estimate of 25%.
As of today, January 2018, based on the last 2 quarters, the company has already delivered Sales of Rs. 225 crores. Therefore, we are expecting a growth of 23-25% again in March 2018 figures. We still remain bullish on the counter and have upgraded the growth figures for Sales to 30% CAGR for next 2 years.
In the month of March 2018, we are coming out with the 4th version of our Penny Stock Portfolio. CLICK HERE to read more…