Multibagger stock: Swan Energy delivered over 500% return in less than 3 years; up for 6th straight year

Some mid- and small-cap firms have delivered impressive returns to investors in recent years. Swan Energy is one such stock that has delivered phenomenal returns to its long-term shareholders.

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The company’s shares, valued at ₹120 apiece in November 2021, have surged by 518% to reach the current price of ₹742 per share. A significant portion of this increase occurred over the past five months, with the stock rallying from ₹287 per share to its current level, delivering a massive return of 160%. 

In terms of yearly performance, the stock has consistently delivered positive returns over the last five years. In CY19, it saw a surge of 7%, followed by gains of 24.59% and 9% in CY20 and CY21, respectively. CY22 witnessed a remarkable multi-bagger return of 110%, while CY23 concluded with another stellar performance, yielding a return of 67%.

As for the current year, it has seen an increase of 45% thus far. On February 19, the stock reached an all-time high of ₹764 per share. This impressive performance is attributed to the company’s strong diversification.

About Swan Energy

Incorporated in 1909 as a textile company, Swan Energy was acquired in 1992 by its current promoters, Mr Navinbhai Dave and his son-in-law, Mr Nikhil Merchant, from the JP Goenka Group. After acquiring the company, the management steered it out of financial distress by diversifying into the real estate and energy sectors. 

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Noteworthy acquisitions include Veritas India Ltd. (VIL) and Reliance Naval & Engineering Ltd. (RNEL), bolstering its presence in petrochemicals, defence, and shipbuilding. The company’s recent financials reflect diversified revenue streams and promising growth prospects, underpinned by robust EBITDA margins. 

As of December 31, 2023, SEL’s strategic acquisitions and diverse portfolio position it for sustained growth, said domestic brokerage firm Sunidhi Securities & Finance.

India’s first Floating Storage & Regasification Unit

India’s first floating storage & regasification unit (FSRU) marks a significant milestone for the company. Situated at Jafrabad Port, Gujarat, this LNG import terminal is nearing completion and is set to commence operations in April 2024. 

Initially designed with a capacity of 5.0 MMTPA, plans for Phase II aim to double this capacity to 10.0 MMTPA by 2027–28. Operating on a tolling terminal basis, the project has secured long-term off-take contracts with major entities like GSPC, ONGC, BPCL, and IOC, ensuring a steady revenue stream, as highlighted by brokerage. 

Outlook & Valuation 

At the current market price, the stock trades at 69 times the trailing twelve-month (TTM) earnings per share (EPS) of ₹10.5 and 25 times the enterprise value to earnings before interest, taxes, depreciation, and amortisation (EV/EBITDA) based on TTM EBITDA of ₹9,340 million. 

The brokerage maintains a positive outlook for SEL due to significant capital expenditure across various business segments, financed through a combination of debt and equity, thereby managing debt levels effectively. However, the brokerage has not assigned a rating to the company.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.

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Published: 21 Feb 2024, 11:29 AM IST