In this article, we will disclose one multibagger defense and EV stock which has risen over 100% in just 6 months.
Was this phenomenal increase in stock price due to overall industry’s growth? Or is there something special about the company? Will this rally sustain? Or has it peaked?
As per the report by experts, Indian Defence sector, which has been categorised as 2nd largest armed forces, is at a turning point and should see revolution. Much of this growth is expected to some from Indian government’s focus on ‘Aatmanirbhar Bharat’ or “Self-Reliant India” initiative.
These initiatives focus on establishment of indigenous manufacturing infra
structure helped by requisite R&D ecosystem.
In Union Budget 2023-24, government’s capital allocations relating to modernisation and infrastructure development of Defence Services has risen to INR 1,62,600 crores, exhibiting an increase of 6.7% year-over-year. This industry gets INR 5.94 Lakh crore in its budget 2023-24, which means a jump of 13% in comparison to prior year.
This means that overall defense industry is expected to see strong momentum in the years ahead! Now, what about EV industry? Undoubtedly, this industry is on the cusp of revolution! But, which companies are expected to outperform the industry’s performance?
As per the report by Bain & Co., by end of 2030, electric two-wheelers should form ~40% – 45% of all the EVs which are sold in India. In addition, electric PV should make up ~15%- 20%. However, according to Niti Aayog report, Indian government targets EV adoption to touch ~40% for buses, ~30% for private cars, and ~70% for commercial vehicles during the same time period.
Is this EV fever global or limited to India only? Well, we believe that this EV fever is globally helping the automobile companies. Even in India, stocks like Tata Motors have seen an increase of ~103% in just 1 year. Much of this increase stems from the increased EV adoption and higher government support.
With this in mind, allow us unveil one multibagger defense and EV stock which has posted ~117% in just 6 months.
Here we go!
Nibe Limited is responsible for several business initiatives to fulfill mission and to build presence in the form of global organization. The E-vehicles branch is engaged in Design, Development, Manufacturing & Trading of E-vehicles and this division offers best-in-class eco-friendly E-bikes.
Nibe Defence Limited is State of the Art and components manufacturing plant which is situated in Chakan, Pune. It focuses on manufacturing wide spectrum of critical components addressing the needs related to the defence industry.
Total standalone revenue from operations of the company for FY23 came in at INR10,495.28 lakhs in comparison to INR 2,124.37 lakhs in FY22. This exhibits a rise of ~394.04%. Profit before taxation for the year came in at INR 627.27 lakhs in comparison to loss of INR 33.27 Lakhs in FY22.
It saw new orders worth INR 2,13,56,24,337 in FY23 and as on March 31, 2023, ~85 number of orders worth INR 1,31,12,29,662 remained under execution.
Growth in Indian economy stemmed from government capital outlay, strong and solid growth in construction sector & manufacturing sector, and healthy growth in agriculture sector and private consumption. Amidst challenges seen in FY23 such as supply chain concerns, significant increase in certain commodities and higher input raw material cost, the company was able to better manage volatile prices, focused on cost reduction initiatives and quality improvement. Collectively, these measures supported it in making profits.
Indian government developed several programs to support manufacturers, like Production Linked Incentive (PLI) Scheme, which has acted cornerstone of Indian government’s endeavor to focus on Atmanirbhar Bharat. Scheme focuses on stimulating domestic defence manufacturing in strategic and emerging areas, enable disciplined cost-competitiveness of locally-made goods, and improve local capacity and economies of scale.
Higher defence spending by several countries and continued focus on infrastructure globally continue to act as tailwinds for the company’s industrial business. Local producers should give preference in defence sector which should offer new opportunities to overall industry. The company has informed investing community that it has acted on previously-announced Share Purchase Agreement (SPA) and thus, has acquired 60,000 equity shares of Anshuni Commercials Limited. This makes up for ~5% ownership in the company, according to the terms of SPA.
Defence sector continues to see strong surge in India, supported by Government of India’s efforts over the previous decade. These efforts focus on putting in place policies which reduces imports and improves self-reliance, enable the development of indigenous world-class products and promote exports. In FY23, defence sector in India touched a significant milestone, as defence production surpassed INR 1 lakh crore mark as a result of consistent efforts by Ministry of Defence (MoD). This hints to the rise of over 12% in comparison to FY22.
Defence activities of the company focus on precision weapons, surveillance communication equipment, Protective Vehicles, etc. Thus, it has made strong breakthroughs in Advanced Towed Artillery Gun System (ATAGS) program. Apart from this, the company has completed final revalidation trial post 5 years of testing.
In FY23, it was able to strategically expand its operations and it has set-up 2 plants. Now, one more plant is going to be operational by FY24 end. All 3 plants remain within MIDC area of Chakan.
Even though Nibe Limited has been tagged as a multibagger defense and EV stock, we emphasise that our readers should focus on fundamentals of the company before making investments in any defense or EV stock.
Since EV and defence sectors are the main focus areas of Indian government, Nibe Limited has performed significantly well.
But what about the future? Is there more upside left? Well, even though the future remains uncertain, it should be noted that the company has strategically expanded its operations and has strong order book. Both these factors paint a rosy picture for the company’s stock.