In the past month, the company’s share price increased by 85 percent. Moreover, it has delivered multibagger returns of 1221 percent in the past five years. Therefore, if an investor had investor had invested ₹ 1 lakh in its shares five years ago, the value of their holdings would have been ₹ 13.21 lakhs today!
Shares of Jaykay Enterprises gained 10 percent to reach a fresh 52-week high of ₹ 81.37 apiece after it acquired a 76.41 percent stake in Allen Reinforced Plastics through its wholly-owned subsidiary JK Defence & Aerospace Ltd. It paid ₹ 90 crores in cash for acquiring the stake.
Allen Reinforced Plastics is involved in the design, development, manufacture and testing of composite and allied engineering products for the purpose of defence, aerospace and engineering products like missile & rocket components, underwater applications, marine and submarine, guns and accessories.
The company’s promoter directors directly oversee the business operations. Allen Reinforced Plastics reported a turnover of ₹ 86.1 million in FY21, ₹ 289.9 million in FY22 and ₹ 252.1 million in FY23.
This acquisition by Jaykay Enterprises through its subsidiary is part of the inorganic growth plans of the company in the defence and aerospace sector. Post-acquisition, Allen will become a subsidiary of JK Defence & step-down subsidiary of Jaykay Enterprises.
Jaykay Enterprises has a full-fledged in-house registry and has also diversified itself into real-estate activities, the manufacturing of engineering products across various verticals and the manufacturing of parts and accessories used in the defence and aerospace sector.
With a market capitalization of ₹ 432 crores, it is a microcap company. It has a low return on equity of 5.38 percent, but an ideal debt-to-equity ratio of 0.18. Its shares were trading at a price-to-earnings ratio of 48.45, which is higher than the industry average of 22.06, indicating that the stock might be overvalued as compared to its peers.
The company’s promoters hold a 51.30 percent stake in it followed by retail investors with 45.93 percent, domestic institutions with 2.60 percent and foreign institutions with 0.17 percent.
Written by Simran Bafna
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