Home / Markets / Stock Markets /  Multibagger small-cap stock rises 1000% in 3 years. Sharekhan sees more upside

Multibagger stock: Hi-Tech Pipes shares are one of the multibagger stocks that Indian stock market has delivered in recent years. After ushering in the new financial year 2020-21, this stock has been in uptrend surging from around 70 apiece levels to 825 per share levels, logging more than 1,000 per cent rise in last three years. However, Sharekhan believe that there is more steam left in this small-cap stock. As per the brokerage report, Hi-Tech Pipes share price may go up to 900 to 910 levels (15 per cent upside from 790 apiece levels) in upcoming sessions.

Expecting steel prices to bottom out soon, Sharekhan report says, "Hot-rolled coil (HRC) prices remained under pressure since April 2022. The average Chinese HRC export prices declined by 2% q-o-q and 24% q-o-q during Q1FY2023 and Q2FY2023 respectively. The sharp reduction in steel prices has led to on an average Rs. 1000/tonne quarterly inventory loss for Hi-tech during H1FY2023. Further, during Q3FY2023 till date, HRC prices have declined by 10% compared to average Q2FY2023. Consequently, the company may continue to suffer inventory loss during Q3FY2023 leading to flattish EBITDA/tonne q-o-q. However, the company expects steel prices to bottom out during Q3FY2023 with limited downside potential from hereon. Hence, its EBITDA/tonne is expected to revert back to Rs. 3000/tonne levels during Q4FY2023."

The brokerage went on to add that the company is in the process of raising Rs. 415 crore from promoter group (57 lakh warrants at Rs. 692/share aggregating Rs. 394 crore) and non-promoter group (3 lakh equity shares at Rs. 692/share aggregating Rs. 21 crores).

Highlighting upon the fundamentals that may continue to fuel share price of Hi-Tech Pipes, Sharekhan report said, "Hitech has appreciated by 30% since our last viewpoint dated November 16, 2022, led by company’s fundraising plans. We believe the proposed fund raise would aid in significantly strengthening its balance sheet, increasing value-added product share and provide it an opportunity for inorganic expansion. The strong demand environment especially driven by Jal Jeevan Mission orders, expected bottoming out of steel prices in Q3FY2023 and increasing share of value-added capacities are key growth triggers for the company."

On expected return from the stock in upcoming session, Sharekhan said, "We stay positive on the stock and expect an upside of 15% owing to upward revision in estimates lead by improved growth outlook."

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

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