Multibagger Stock: Rs 20 Stock Creates Millionaire as Prices Surge Over 43%
Multibagger Stock
Multibagger Stock: Rs 20 Stock Creates Millionaire as Prices Surge Over 43%
In the recent June quarter, the tire giant Seat (CEAT) experienced remarkable growth, with its profits increasing by more than 16 times.
This performance has positioned the stock as a multibagger, generating impressive returns for investors.
Over the long term, this humble Rs 20 share has transformed ordinary investors into crorepatis (millionaires) due to its outstanding performance. In just one year, it has provided an impressive return of 119%.
Despite its historical success, brokerages are now advising investors to exercise caution and consider selling the stock immediately.
This cautious approach is primarily driven by prevailing weak market sentiments, which have caused the stock to slide by 0.98 percent, closing at Rs 2468.85 (CEAT Share Price) currently.
Brokerages predict that the stock might experience a significant correction, potentially plunging more than 43% from its current level.
While it has been an exceptional wealth creator in the past, this cautionary outlook highlights the uncertainties and risks involved in the current market environment.
As with any investment decision, it’s important for investors to thoroughly analyze the stock’s fundamentals, market conditions, and their own risk tolerance before making any choices.
Share of 20 Rupees Made a Millionaire
On August 10, 2001, SEAT shares were valued at a modest Rs 19.96. Fast forward to the present, and the stock is now trading at an impressive Rs 2468.85, signifying a staggering 12269 percent increase in capital over 22 years.
What was once a mere Rs 81 thousand investment has magnified into a massive Rs one crore for investors.
Such exceptional growth has turned ordinary individuals into millionaires, showcasing the remarkable wealth-creating potential of this stock.
Notably, SEAT shares have proven to be a stellar performer not only in the long term but also within shorter time frames, offering tremendous profits to investors.
As of July 27, 2022, the stock had reached a one-year low of Rs 1205.70. However, in a remarkable turnaround, it surged by an astounding 119 percent in less than a year, culminating in a record high of Rs 2640 on July 10, 2023.
While the stock experienced a significant rally, it eventually encountered a pause in its upward trajectory. Presently, it has retraced by more than 6 percent from its peak level.
This recent dip in the stock’s price may reflect market fluctuations and investor sentiment, which could be influenced by various factors.
Despite the recent pullback, SEAT shares have undoubtedly displayed tremendous growth and wealth-building potential over the years, rewarding patient investors and creating millionaires out of those who recognized its potential early on.
As with any investment, it is essential for investors to carefully assess their risk tolerance and conduct thorough research before making decisions in the ever-changing financial markets.
CEAT Stock Forecast: Brokerages Predict Potential 43% Decline Despite Strong Q2 Performance
The recent performance of CEAT has been impressive, with the company experiencing significant growth in its consolidated net profit during the June quarter.
On an annual basis, the net profit surged manifold, escalating from Rs 8.68 crore to an impressive Rs 144.01 crore.
The company’s revenue also exhibited growth during this period, increasing from Rs 2818.38 crore to Rs 2935.17 crore.
A notable factor contributing to this robust financial performance was the company’s EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) which witnessed a substantial increase of 124.58 percent, reaching Rs 384.7 crore.
The improvement in the EBITDA margin, reaching 13.2 percent, can be attributed to a decline in raw material costs and a more favorable product mix.
Despite these positive financial indicators, brokerage firm Kotak Institutional Equities holds a cautious outlook for the stock, suggesting that it could potentially experience a decline of more than 43 percent.
The brokerage expresses concerns about maintaining the current level of profitability in FY24, as it perceives challenges in the medium term.
They believe that the stock’s valuation of 19x FY2024E is relatively expensive, primarily due to the company’s weak return-ratio profile during the capex cycle and the commodity-centric nature of its business.
Given these considerations, the brokerage maintains a Sell rating for the stock and sets a fair value of Rs 1,400. Additionally, another brokerage firm, ICICI Securities, has downgraded its rating on CEAT to Sell and established a target price of Rs 1,669.
These assessments and downgrades may be influencing investor sentiment, leading to some downward pressure on the stock’s price in the market.
However, as with any investment decision, it’s crucial for investors to carefully evaluate the provided analysis and conduct further research to make informed choices based on their own risk tolerance and investment objectives.
Market conditions can change rapidly, and it is essential to stay updated with the latest developments and expert opinions.
