Multibagger Stock: Investing in the stock market can yield substantial rewards when the right stocks are chosen, but it can also lead to disappointing outcomes if investments are made unwisely. Fortunately, shareholders of Diamond Power Infrastructure have reasons to celebrate, as the shares of this company delivered phenomenal returns.
The stock has been on a winning run in recent years, with a 516% gain over the last year, spiking from ₹19.90 to the current market price of ₹122.60. Zooming out, the stock has delivered stellar returns of 4,400% over the last 16 months.
Diamond Power Infrastructure is small-cap stock with a market capitalisation of ₹6,500 crore. The company is a leading manufacturer of power cables, including LV, MV, EHV, and conductors. Its products play a critical role in projects related to power generation, electricity transmission and distribution, and various industrial applications. The company supplies cables to government distribution companies (discoms), private discoms, private EPC contractors, industrial clients, and export markets.
The company is poised to benefit from the growing demand for renewable energy technologies, such as wind and solar power, which require power cables for transmission.
Moreover, increasing government investments in infrastructure development projects, including smart cities, highways, and railways, are expected to further drive demand. The rising adoption of electric vehicles, which require charging infrastructure and power cables, presents yet another significant growth opportunity.
According to various reports, the Indian wire and cable market has surged to approximately ₹750 billion in FY 2022-23, up from ₹335 billion in FY 2014-15. The industry is estimated to have registered a volume growth of around 10% between FY15 and FY23.
Looking ahead, it is expected to grow at a CAGR of 13% through FY27, reaching ₹1,200 billion, fueled by higher government spending on infrastructure, growth in the real estate sector, and increased private capital expenditure.
The conductor market in India is also experiencing remarkable growth. In 2023, the market was valued at approximately USD 1.5 billion. It is projected to grow at a CAGR of 8–10% between 2023 and 2028, with an anticipated market value of USD 2.2 to 2.5 billion by 2028.
Government initiatives are further driving demand for conductors, particularly in rural areas. Schemes like the Saubhagya Scheme, aimed at universal electrification, and the Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY), designed to improve rural electrification and power infrastructure, are playing a vital role in supporting this growth trajectory.
The company during FY24 identified significant growth opportunities in the solar and electric vehicle (EV) sectors, driven by increasing demand for renewable energy solutions and electric mobility.
To meet the increasing demand and capitalise on market opportunities, it is planning significant expansions in both the solar wire and cable market as well as the EV cable market over the next three years.
These includes increasing its manufacturing capacity to produce a broader range of high-quality cables that meet the evolving needs of these sectors. By expanding production capabilities, the company aims to strengthen its market presence and ensure a reliable supply of advanced cable solutions.
Diamond Power is looking to enter new markets by leveraging its expanded capacity and strategic partnerships, involving exploring opportunities in emerging markets with high potential for solar and EV adoption, as per the company's FY24 annual report.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
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