Auto stock hits 5% upper circuit for 3rd day in a row; What’s causing the rally?

The shares of Shriram Pistons & Rings Ltd shot up by a 5 percent upper circuit, from the last two trading sessions, reaching a 52-week high of ₹1,427.75 on Thursday. One of the probable reasons for today's record-high stock prices is the company's recent announcement of Q4 FY 22-23 earnings.

As per Consolidated financials of the previous quarter, their operating revenues have increased 9.27 percent from ₹ 636 crores in Q3 to ₹ 701.01 crores in Q4. Similarly, for YoY comparison, the revenues significantly increased from ₹ 2064.66 crores during FY 21-22 to ₹ 2609.3 crores in FY 22-23.

The net profit of the company has increased 22 percent from ₹74.86 crores in Q3 to ₹ 91.38 crores in Q4. Similarly, for YoY comparison, the net profit significantly increased from ₹ 163.57 crores during FY 21-22 to ₹ 293.88 crores in FY 22-23.

Shriram Pistons & Rings Ltd is the largest manufacturer and exporter of pistons, piston pins, piston rings, and engine valves for various automotive companies in the domestic and export markets. Such as Ford, Honda, Kia, and Renault (EPA:RENA).

On a year-to-date basis, the stock has gained 20 percent. On a yearly basis, the stock price has risen from ₹ 665.25 to the current price levels, logging a multibagger return of 119 percent.

The basic profitability ratios exhibiting operational efficiencies such as return on equity (ROE) and return on capital employed (ROCE) showed an upward trend in the past couple of financial years.

The ROE has moved up from 7.79 percent during FY 20-21 to 13.13 percent in FY 21-22. Similarly, the ROCE, in the same time frame, took a shift from 10.48 percent to 16.86 percent. Meanwhile, the debt-to-equity ratio has risen marginally from 0.09 in FY21 to the current 0.11.

According to the latest data pertaining to the shareholding pattern, the promoters hold a 46.75 percent stake, and Domestic Institutional Investors (DIIs) hold a 10.05 percent stake in the company for FY 22-23.

The post Auto stock hits 5% upper circuit for 3rd day in a row; What's causing the rally? appeared first on Trade Brains.

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