Shares of multibagger Tube Investments of India (TII), part of Murugappa Group, hit their all-time high in the current trading session after the management shared an update on the company's core businesses and TI-2 strategy. At 12:42 pm, the scrip was trading 1.71 percent higher at Rs 3,225.75 apiece on the NSE. TII shares gained 2 percent to hit a record high of Rs 3234.6 apiece in Thursday's trade.
The multibagger stock, which was at Rs 274.75 on April 3, 2020 rallied more than 1,000 percent to Rs 3,226 on the NSE today (June 22, 2023). An amount of Rs 1 lakh invested in the shares of this multibagger three years ago would have turned into Rs 10 crore today. In comparison, Sensex has risen 130 percent during the period.
TII shareholders are ecstatic with its stunning performance of the stock over the last years. Investors who held the stock for the long term saw significant gains, as it generated a return of almost 1,345 percent over the past five years, rallying from Rs 223.20 apiece to Rs 3,226.35.
The stock of Tube Investments of India has risen 8 percent in the last five trading sessions. On a year-to-date basis, the stock gained 16 percent and rose 113 percent in the last one year. Market capitalisation of the firm rose to Rs 62,327 crore.
In terms of technicals, the 14-day relative strength index (RSI) of the Tube Investments stock stands at 78.4, signaling it's trading in the overbought zone. Tube Investments shares have a beta of 0.5, indicating very low volatility in a year. The stock is trading higher than the 5 day, 20 day, 50 day, 100 day and 200 day moving averages.
Domestic brokerage house Motilal Oswal has a 'Buy' rating on the counter, with a target price of Rs 3,560, suggesting a potential upside of 12 percent on the stock from the current market levels.
Recovery in engineering biz likely in FY24
TII's management indicated good growth in the company's core businesses, according to analysts at Motilal. The company expects a good recovery in the engineering business in terms of revenue and margins. The metal formed business is expected to grow 10 percent, assuming no material recovery in the railway business. The EV businesses are moving from the investment phase to the commercialisation phase in FY24, analysts said.
The engineering business is expected to grow in double digits over the next two to three years, driven by a recovery in the 2-wheeler segment and exports and a ramp-up in large diameter tubes.
Tube Investments of India offers a robust growth story, driven by reasonable growth in the core business and by leveraging strong cash flows of the core business (TI-1) to systematically incubate future growth platforms (TI-2) and opportunistic acquisitions of stressed assets (TI-3) at attractive prices, Motilal noted.
TI-1 offers diversified revenue streams, with strong growth in the core business, a ramp-up in CG Power, and optionality of new businesses incubated under the TI-2 strategy.
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