Multibagger alert: This micro-cap chemical company turned its investors into millionaires!
An investment of Rs 1 lakh in the shares of this company two years ago would have turned to Rs 20.65 lakhs today!
Jyoti Resins and Adhesives Ltd, a micro-cap company whose latest market cap stands at Rs 915.96 crore, has delivered multibagger returns to its investors in the last two years.
The company is in the business of synthetic resin adhesives. It manufactures various types of wood adhesives (white glue) under the brand name EURO 7000. Launched in the year 2006, this EURO 7000 is now the second-largest selling wood adhesive (white glue) brand in India in the retail segment.
The company aims to secure the top position in the wood adhesives field in the retail segment and become India’s most preferable adhesive brand for carpenters. For this, the company designed a unique carpenter reward model system which is a loyalty program for carpenters. At present, 3 lakh carpenters are registered under this program.
Looking at the financial performance over the last 8 quarters, the company’s sales have increased over 7x, whereas the PAT has grown over 6x. Similarly, the EPS has grown from Rs 2.80 in June 2020 quarter to Rs 17.30 in March 2022 quarter.
The company has a sharp focus on keeping its costs low. Its overall manpower costs are limited to 15-16% of revenues whereas selling and distribution expenses are maintained under 12%. The company’s asset turnover is at 8x and it has the highest EBITDA per tonne vis-à-vis peers.
At present, the company is trading at a TTM PE of 48.41x, as against the PE of 89.1x of Pidilite Industries Ltd, which is the market leader in the organized adhesives industry. In FY22, Jyoti Resins delivered an exceptional ROE and ROCE of 43.21% & 57.95% respectively. In contrast, Pidilite delivered an ROE and ROCE of 19.7% & 25.7%, respectively.
At the closing bell, the shares of Jyoti Resins & Adhesives were trading at Rs 2325 apiece, a decrease of 2.79% from the previous closing price of Rs 2391.85 on BSE.
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