February 2024 is All About this Multibagger Solar Penny Stock

Last week, we wrote about the top performing penny stocks of 2024 and how these modestly priced stocks have quietly outperformed their flashier counterparts.

Adding to that list, one company from the industrial products space has surged 78% in the past one month...

Taking its 1-year gains to 450%...

And the gains in 2024 so far to almost 100%!

The best part is...

This stock currently trades at less than Rs 10.

The stock in question is Ishan International.

About Ishan International

Initially, the company was engaged in the business of rice milling. The firm uses paddy as raw material and rice was the final product.

It was only later that it diversified into the heavy engineering sector.

At present, the company has diversified operations including contracting and building projects that focus on supplying machines, installation, commissioning, and operational training for sugar plants, hydropower plants, among other things.

Most of its business is focused on international markets as it derives around 75% revenue from its exports.

According to its annual report, it has projects in Philippines, Vietnam, and Indonesia for multiple clients.

Ishan International was listed on the NSE SME section in September 2022 after raising Rs 182 million.

What Explains the MASSIVE Rally?

In the month gone by, the stock is up almost 80% while it has gained 10% in the past five days.

The steep rally comes following its board of directors approving a bonus issue of 2:1.

Shares price of the company was adjusted to make up for the bonus shares that were paid in January 2024.

Apart from the bonus shares announcement, the other reason that explain the current rally is Ishan International getting a solar project order from the Maharashtra government.

The order involves the supply, installation and maintenance of solar-powered agricultural pumps under the Pradhan Mantri Kisan Urja Suraksha and Utthan Mahabhiyaan (PM-KUSUM) yojana.

The project is valued at Rs 1.5 billion (bn), which is more than 3x its FY23 sales.

This project is also expected to push its turnover in the upcoming quarters.

PM Modi talked about this scheme in detail at the Ram Mandir opening, which was followed by Finance Minister Nirmala Sitharaman's interim budget speech last week.

What Next?

No doubt, Ishan International has carved a niche after operating in the industry for over 26 years.

If government wants to install small solar power plants, it will need 2 million standalone solar powered agriculture pumps and 1.5 million grid connected agriculture pumps.

And it will need more companies like Ishan International to do so at a faster pace.

For the quarter ending September 2023, Ishan International reported net sales of Rs 90 million (m) and returned to profitability.

The company has also reduced debt with its debt to equity ratio coming down to 0.2x from 1.4x in FY22.

Here's a table comparing Ishan International with its peers on several parameters -

Comparative Analysis

Company	Ishan International	Alphageo	Affordable Robotic	Organic Recycling
ROE (%)	3.5	4.7	3.8	22.2
ROCE (%)	6.2	6.6	8.1	8.8
Latest EPS (Rs)	0.1	3.9	2.1	4.8
TTM PE (x)	223.3	99.7	244.8	50.9
TTM Price to book (x)	3.1	0.9	8.9	2.5
Dividend yield (%)	0.0	2.1	0.0	0.0
Industry PE	36.4
Industry PB	10.7

Data Source: Ace Equity

In conclusion, as India seeks El Dorado with the massive solar push, we could see the multiplier effect happening in the pump sector and benefiting several solar pump manufacturers.

We won't be surprised to see several small players like Ishan International getting orders under this scheme.

At present, Shakti Pumps has a dominant market share in the domestic solar pump market under the PM KUSUM scheme.

A word of caution...

Although the sector is witnessing high growth, it is important to treat these stocks with the same amount of caution as other stocks.

More so in the case of penny stocks because majority of the crowd considers them as 'highest possible risk for the highest potential return' type of investments.

While they present potentially the biggest upside potential of any group of stocks, they can also erode wealth faster than any other group.

Happy investing!

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...