Power Mech: This power infra company surged by over 800% in 3 years, 466% in 2 years

Consistently achieving multibagger returns year after year is a notable achievement for any stock, particularly given the unpredictable nature of the market. Nevertheless, Power Mech Projects has demonstrated exceptional performance, with its shares consistently delivering stellar returns over the past three years, and this trend persists into the current year.

Two years ago, Power Mech Projects shares were trading at ₹928 each. Since then, they have surged by an impressive 466%, reaching the current price of ₹5,255 per share. Remarkably, over the last three years, the stock has delivered an even more impressive return of 811%.

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Looking at the stock's annual performance, it has consistently achieved multibagger returns over the past three years. In CY23, it recorded a gain of 116%, and a 111% jump in the preceding year. Similarly, in CY21, it saw a significant increase of 117%.

This stellar performance by the stock can be attributed to significant order wins and continuous improvement in its financials with each passing quarter.

Power Mech Projects, with a market capitalisation of ₹8,317 crore, is a small-cap stock and an integrated power infrastructure services company in India. It specialises in providing comprehensive services including erection, testing, and commissioning of boilers, turbines, and generators (ETC-BTG), balance of plant (BOP) works, civil works, and operation and maintenance (O&M) services.

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Recent order wins

In mid-April, the company received orders under three packages totaling ₹122.89 crore from the state-owned engineering firm BHEL. Additionally, it secured another order from Jindal Steel Odisha Limited valued at ₹56.40 crore for the erection of structural steel for coke oven and plate mill buildings at JSOL Angul.

In March, the company secured an order worth ₹305.81 crore from the South East Central Railway in Chhattisgarh. This project entails the construction of an electrified fourth railway BG (Broad Gauge) line between Rajnandgaon-Dongargarha and Bhilai-Durg link block stations in Chhattisgarh.

During the same month, the company also secured contracts for the construction of the Upper Burhner Project Dam and Pressurized Pipe Irrigation Network from the Madhya Pradesh Water Resources Department, Government of Madhya Pradesh, valued at ₹541.62 crore, and the boiler and ESP package for overhaul, including spares, for the 2x125 MW Akrimota Thermal Power Station of Gujarat Mineral Development Corporation, valued at ₹116.95 crore.

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In February, it secured an order worth ₹396 crore from the Southeast Central Railway. 

The company commenced its railway infrastructure projects in 2016. Since then, it has developed expertise in a range of railway projects, including the construction of pre-engineered buildings and railway maintenance workshops. 

It remains committed to expanding its presence in the railway sector, aiming for it to constitute 8% to 10% of its total business by FY26.

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Meanwhile, the company has significantly expanded its presence in the water business. Over the next two years, it anticipates that the water business will account for over 15% of its total operations.

Stake increase

During Q4FY24, foreign institutional investors (FIIs) raised their stake in the company to 5%, up from 4.2% in the preceding quarter. Similarly, domestic institutional investors (DIIs) also increased their holdings to 19.4% in the March quarter, compared to 18.6% in Q3FY24.

As of the end of Q4FY24, promoters maintain the majority stake of 60.4% in the company, while regular shareholders hold a 15.2% stake, according to data from Trendlyne.

Disclaimer: We advise investors to check with certified experts before making any investment decisions.