Mukul Agrawal Buys 240,000 Shares of this Multibagger Railway Stock

Last week, a railway company filed its shareholding pattern till the period ended October 2023 and it was reported that ace investor Mukul Agrawal has bought a significant stake in it.

Before we move on to company details, let's look at who Mukul Agarwal is and what are his top stock picks.

Who is Mukul Agrawal?

Mukul Agrawal is a prominent investor in India, who is known for his microcap stocks and smallcap stock picks.

His style of investment involves a mix of offence and defence, with majority of time an offensive strategy after proper analysis and keeping two separate portfolios for investing and trading.

With over 54 stocks in the kitty, his portfolio is worth over Rs 46 billion (bn).

Which Stock did Mukul Agrawal Buy and Why?

The latest shareholding pattern of Concord Control Systems shows that Agrawal bought over 4% stake in the company after September 2023.

He currently holds 240,000 shares of the company.

Prior to this, in the September 2023 quarter, he didn't have any stake in the company.

Companies have to report the names of shareholders holding more than 1% stake in the firm.

While we don't know the exact reason why Agrawal invested in the railway stock, there are some reasons we can guess...

Concord Control Systems holds the status of being an approved vendor by the Research Design and Standards Organisation ("RDSO"), enabling it to manufacture and supply critical products for the Indian Railways.

The company has client including various zones of the Indian Railways and organizations like KEC International, L&T, Kalpataru Power Transmission, RVNL, Fedders Lloyd Corporation, and Tata Projects.

Consistent growth in sales and net profit has resulted in high double digit return ratios.

It has also reduced debt along the way and is almost debt free.

Financial Snapshot

Rs m, consolidated	FY20	FY21	FY22	FY23
Net Sales	159	175	317	494
Growth (%)	-	10%	81%	56%
Operating Profit	17	23	39	80
OPM (%)	11%	13%	12%	16%
Net Profit	10	14	26	54
Net Margin (%)	7%	8%	8%	11%
ROE (%)	29.9	33.9	42.6	38
ROCE (%)	27.3	29.6	38	42.9
Dividend (Rs)	0	0	0	0
Debt to Equity (x)	0.6	0.7	0.4	0.1

Data Source: Ace Equity

The company recently acquired 26% stake in Progata India. This will help in developing the prototype of control and relay panels.

While all this is rosy, what's even more optimistic is the recent Rs 1 tn capex plan for the Indian railways to keep pace with economic growth.

This investment will cover crucial aspects such as track laying, safety technology, and station upgrades.

For the financial year 2023-24, Indian Railways was given a budget of Rs 2.4 trillion by the government. Of this, 70% has already been used.

This highlights the need for funds. The proposed procurement of trains will involve maintenance contracts and specific conditions mandating their production within India, leveraging existing railway infrastructure.

This will enhance the performance of companies operating in the railway sector, providing them with more opportunities.

How Concord Control Systems Share Price has Performed Recently

In the past three months, the stock price has gone up by around 10%.

In 2023 so far, Concord Control Systems share price is up over 200%.

Concord Control has a 52-week high of Rs 799 touched on 11 December 2023 and a 52-week low of Rs 178 touched on 2 March 2023.

Here's a table comparing Concord Control with its peers.

Comparative Analysis

Company	Concord Control	BPCL Rail	Cranex	Fluidomat	Rolcon Eng
ROE (%)	37.9	9.9	6.1	21.3	19.3
ROCE (%)	42.9	15.3	7.2	28.5	27.9
Latest EPS (Rs)	9.1	4.7	1.5	19.5	35.1
TTM PE (x)	72.9	26.1	36.4	30.9	17.6
TTM Price to book (x)	11.9	2.3	3.2	6.1	2.3
Dividend yield (%)	0	0.6	0	0.8	0.3
Industry PE	44.9
Industry PB	5.2

Data Source: Ace Equity

About Concord Control Systems

Concord Control Systems is engaged in the business of manufacturing and supply of coach-related and electrification products for Indian Railways and other railway contractors.

It started operations in 2011 when it got approval to manufacture and supply battery chargers for traction systems of railway electrification.

It further expanded in manufacturing products fitted in coaches of Indian Railways in 2013.

It also received approval for emergency light units which is one of the most critical items of rolling stock application in coaches of Indian Railways for passenger safety.

To know more, check out Concord Control Systems financial factsheet and its latest quarterly results.

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...