Stock screener: 8 multibagger smallcaps with consistent EBITDA margin over 15%

When the filter was narrowed down to stocks that doubled during the period, the screener threw up 8 multibaggers. For the sake of this study, we excluded banking and financial stocks as the EBITDA margin metric is not applicable to them. We also filtered out companies with market capitalisation below Rs 500 crore.

For Kolkata-based value investor Rahul Das, engineering services stock Mold-Tek Technologies is up 400% and capital goods manufacturer Elecon Engineering 550%.

“I bought Elecon in 2021 as a capital goods and turnaround play. The management is awesome and it is the only company to have an in-house robot manufacturing facility. Mold-Tek was bought in 2019 and it is expecting considerable growth in the EV segment,” Das told ETMarkets.

Here’s a short note and outlook on all the above 8 smallcap multibaggers:

1) Mold-Tek Technologies

Engaged in civil and mechanical engineering services, Mold-Tek has seen consistent rise in sales, PAT and margins in each of the last 3 quarters. No wonder, the stock is up over 200% in the last one year.

“Key trigger for the company is the significant operating margin expansion to the tune of 900 basis points leading to 2.5 times increase in EPS. It is a proxy play to the capital goods theme. It still looks cheap and can be looked at for a 25-30% upside in next 12 months,” said Raghav Wadhwa of Samar Wealth.

2) Elecon Engineering Company
Pratik Kothari of Unique PMS said Elecon, which is his largest holding, was available at under 10x cash flow with a potential for better earnings quality. “Currently, Elecon is on a strong growth trajectory in both of its segments with a favourable tailwind while delivering 25%+ ROCE, though reflected in its valuations which are at 25x PE,” he said.

The stock is now trading at a Price to Book value of 5 times as compared to 2 times a year back. “The stock price now looks a bit inflated and I am expecting the price to retrace back to its mean around Rs 490-95 levels, which would be an ideal place to take any fresh entries,” Wadhwa said.

3) Anant Raj
Realty plater Anant Raj, which is engaged mainly in residential and housing projects in NCR and Haryana, attracted attention after it demerged its projects wing into a separate company in 2020. “The company is into a cyclical business and the long-term growth trajectory is tough to ascertain. The stock is in a continuous uptrend and is a good contender for swing and positional trading,” investment advisor Wadhwa said.

4) Nitta Gelatin India
Nitta Gelatin which is a global supplier of gelatin and collagen peptides. “This MNC is well-equipped to meet the growing demand in sectors like pharmaceuticals, food, and personal care. EPS of the company has more than doubled in the last one year. The company has a ROCE of 33% with a PE of 11. The stock is relatively cheap and can be bought for a 40% upside,” according to Wadhwa.

5) Triveni Turbine
Triveni Turbine, which reported revenue growth of 56% YoY, is on investor’s radar on account of robust enquiry pipeline, strong exports and healthy aftermarket outlook.

Domestic brokerage firm Prabhudas Lilladher has downgraded the stock to accumulate rating with a revised target price of Rs 416.

6) Aurionpro Solutions
Aurionpro Solutions is an IT service provider providing business solutions in fields of transaction banking platform, smart city, smart transportation, etc. Wadhwa suggests fresh investors to avoid the stock at current market price due to the sharp rally seen recently.

7) Ramkrishna Forgings
Ramkrishna Forgings, which manufactures forged components of automobiles, railways and other engineering parts, is seen as a beneficiary of the government’s push towards modernisation of Indian Railways.

“The company has a solid orderbook. The management is confident that they will successfully pass on any increase in raw material prices. There is a revenue potential of almost Rs 4,000 crore from the current capacity that they have,” said Rahul Das of LNPR Capital.

8) Diamines & Chemicals
Diamines & Chemicals is the key manufacturer of ethylene amines, which is a building block of many industries including paints, textiles, lubricants, etc. In the March quarter, the company posted the highest ever quarterly sales of Rs 35 crore.

The stock is currently available at a price earning multiple of 13 times, “I expect the company to trade at 15 times and with expected FY24 EPS of Rs 54, the expected one-year target price of the stock comes around Rs 810,” Wadhwa said.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)