Imagine investing ₹1 lakh in two companies five years ago, and watching your investment soar to over ₹1.8 crore today. Such remarkable growth is rare, but it highlights the potential of certain companies that capitalize on favorable market conditions and robust demand. In this article, we will explore two standout stocks that have achieved an impressive 180-fold increase in value over the last five years, making their investors quite wealthy.

PG Electroplast: A Leader in Electronics Manufacturing

Founded in 2003, PG Electroplast has emerged as a prominent player in the Electronic Manufacturing Services (EMS) sector, specializing in the production of printed circuit boards (PCBs) and plastic components. This company serves a variety of industries, including consumer electronics, automotive, and home appliances, providing comprehensive assembly solutions in collaboration with original equipment manufacturers (OEMs).

Diverse Revenue Streams

PG Electroplast operates through four distinct business segments:

• Product Business: Generating 61% of total revenue, this segment includes room air conditioners, washing machines, and air coolers.
• Plastic Molding: Contributing 25.3% of revenue.
• Consumer Electronics: Accounting for 13.6%, this segment covers a wide range of products like televisions and other electronic devices.

The company’s client roster features industry giants such as LG Electronics, Whirlpool, and Acer, reflecting its strong market position.

Financial Growth and Market Trends

The company’s revenue has seen explosive growth, with its product business skyrocketing from 23.5% of total revenue in FY20 to 61% in FY24. This vertical alone has experienced an 11x increase over four years, boasting a CAGR of 83%. The total revenue climbed from ₹1.5 billion in FY20 to an impressive ₹16.7 billion in FY24.

• Revenue Growth: PG Electroplast’s revenue has expanded at a CAGR of 44%, reaching ₹27.5 billion in FY24.
• Profit Growth: Net profits soared from ₹26 million to ₹1.37 billion, marking a staggering 169% CAGR increase.

The company’s EBITDA margin improved from 6.3% in FY20 to 10% in FY24, while its return on equity (RoE) jumped from 1.5% to 19%.

Future Prospects

Looking ahead, PG Electroplast is poised for further growth. With plans to enhance its washing machine production and expand into television manufacturing, the company is capitalizing on rising demand. Currently, the share price has increased over 250x in the past five years.

Transformers and Rectifiers: Powering Growth in the Transformer Industry

Transformers and Rectifiers stands out as one of India’s largest transformer manufacturers, boasting a total installed capacity of 33,200 mega volt-ampere (MVA). With three operational units in Gujarat, the company provides a range of transformers, including power, distribution, and rectifier transformers.

Industry Revival and Financial Performance

In recent years, the company has thrived due to a resurgence in the transformer industry, fueled by government investment and infrastructure initiatives. Key financial highlights include:

• Revenue Growth: A CAGR of 28.5%, with revenue increasing from ₹7.3 billion in FY21 to ₹19.9 billion in FY25.
• Profit Surge: Net profits skyrocketed to ₹1.8 billion in FY25, marking the highest profit in the company’s history.

The share price of Transformers and Rectifiers has also risen dramatically, approximately 180x over the past five years.

Strategic Expansion Plans

To sustain its growth trajectory, the company has raised ₹5 billion for expansion and backward integration. It aims to achieve $1 billion in revenue by FY28, with substantial investments planned over the next 15 months, including the addition of a new 15,000 MVA capacity.

Conclusion: A Bright Future Ahead

Both PG Electroplast and Transformers and Rectifiers have showcased remarkable performance over the past five years, driven by strong market demand and strategic execution. Their focus on expanding operations and improving profit margins signals a positive outlook for future growth.

While these companies have garnered significant attention, it’s essential for investors to remain cautious as current valuations are above historical averages. Investing in high-growth stocks can be rewarding, but it also comes with inherent risks, including the potential for earnings slowdowns.

Final Thoughts

As the market continues to evolve, staying informed about these companies’ developments will be crucial for potential investors. Always consider consulting a financial advisor before making investment decisions to align with your financial goals.

This article aims to provide insightful analysis and data, helping you understand the dynamics of these promising stocks. For more information about the Indian stock market, check out our related articles.