Imagine you invested ₹1 lakh each in two listed companies five years ago, and now the amount has grown to over ₹1.8 crore. Undoubtedly, this is a rare feat that only a few companies have achieved in such a short time. Such companies often have specific characteristics that help them grow rapidly.
This outperformance comes from companies that operate in sectors with massive tailwinds, favorable government policies, and high product demand. These factors help them grow their financials faster than expected, leading to outperformance.
As such, we’ve picked two stocks that have surged more than 180-fold over the past five years, potentially making investors who stay invested very rich. Let’s take a look.
Established in 2003, PG Electroplast is a leading player in Electronic Manufacturing Services (EMS). The company specialises in manufacturing printed circuit boards (PCB) and plastic components, including all kinds of plastic moulding.
The company offers services across diverse industries, including consumer electronics (coolers, air conditioners), automotive, and home appliances. It provides end-to-end assembly solutions in partnership with original equipment manufacturers.
The company operates in four business verticals. The product business vertical, encompassing room air conditioners, washing machines, and air coolers, remains the leading revenue driver, contributing 61% to its total revenue.
This is followed by plastic molding, which contributed 25.3%, and consumer electronics (13.6%). The consumer electronics vertical covers various products, from televisions to other electronic devices, providing end-to-end solutions to leading OEMs.
Its clientele includes leading names in the electronics world, such as LG Electronics, Carrier, Jaguar, Kohler, Whirlpool, Godrej, AO Smith, Acer, Voltas, Orient Electric, Blue Star, Croma, Crompton, etc.
PG Electroplast is at the forefront of a massive sectoral tailwind, driven by the Make in India initiative amid the China+1 push. The numbers show this.
In FY20, the product business contributed 23.5% of its total revenue; today, it dominates with a 61% contribution. Revenue from the vertical has grown 11x over the last four years at a compound annual growth rate (CAGR) of 83%, growing from ₹1.5 billion (in FY20) to ₹16.7 billion in FY24.
Of the Rs 16.7 billion, 79% comes from room air conditioners (RACs)—a high-demand product due to rising heat and per capita income. Import restrictions and production-linked incentives prompted OEMs to tie up with domestic manufacturers, benefiting PG Electroplast players.
Its momentum can also be seen in its financial performance. Its revenue has grown at a CAGR of 44% over the last four years, from ₹6.40 billion in FY20 to ₹27.5 billion in FY24 – up 27.2% year-on-year.
The company also translated revenue growth into profits, growing at a massive 169% CAGR from ₹26 million to ₹1,370 million – up 77% from FY23. This growth was led by operating leverage, as fixed costs were spread over a growing revenue base, leading to improved margins.
Its earnings before interest, tax, depreciation and amortisation (EBITDA) margin has grown from 6.3% in FY20 to 10% in FY24.
Better profitability also led to its return on equity (RoE) improving from just 1.5% to 19% in FY24, while return on capital employed (RoCE) grew to 21.6% from 7.5% in FY20.
The strong growth continued in 9MFY25, with revenue growing 77% YoY to ₹29.6 billion, while net profit surged massively, 121% to ₹1.4 billion. The margin also improved by four basis points to 9.7%.
Looking ahead, the company is receiving increasing business opportunities from new and existing customers. Thus, it aims to scale the product business. Its second AC manufacturing plan is in the final stages of commissioning.
PG Electroplast Share price is up over 250x in 5 years.
It is expanding its washing machine production capacity, targeting two lakh units per month. To this end, it has already secured a contract to handle contract manufacturing for select models of Whirlpool’s semi-automatic washing machines.
Additionally, it has expanded into television manufacturing and is in the advanced stages of negotiating a partnership in RAC compressors.
It plans to use 60-70% of its production internally, increasing profit margins, while the remaining 30-40% of production will be sold to external customers.
The company trades at a PE of 114x, much higher than the 10-year median PE of 53, probably due to valuation re-rating. Comparatively, it trades at par with Kaynes (120x) and a slight discount to Dixon (126x).
#2 Transformers and Rectifiers
Transformers & Rectifiers is one of India’s largest domestic transformer manufacturers, with a total installed capacity of 33,200 mega volt-ampere (MVA). It has three units in Gujarat: Odhav (1,200 MVA), Changodar (12,000 MVA), and Moraiya (20,000 MVA).
It is present in a wide range of transformers, including power transformers, distribution transformers, furnace transformers, rectifier transformers, and shunt reactors, which are used in the power transmission and distribution sector and other industrial sectors.
The company’s financial position has changed in the last few years, driven by the industry’s revival. Several factors, such as government capex, capacity addition at power plants globally, and infrastructure development, have given a huge boost to transformer manufacturers.
Revenue has grown at a CAGR of 28.5% over the last four years to ₹19.9 billion in FY25 from ₹7.3 billion in FY21. As operating leverage kicked in, margins increased from 10% to 16%.
Higher margins and strong revenue growth have led to a 127.4% CAGR increase in profit to ₹1.8 billion. Net profit of ₹1.8 billion in FY25 is the highest ever.
Transformers and Rectifiers Share Price is up about 180x in 5 years.
The management expects the sectoral tailwind and strong growth to continue going forward. To capitalise on demand, the company has also raised ₹5 billion via qualified institutional placement to support backward integration and expansion.
It has achieved phase one of its ambitious target by achieving revenue of about ₹20 billion in FY25 and progressing well to reach $1 billion in revenue by FY28. For this, it is investing ₹ $5.5 billion in the next 15 months in expanding capacity.
In addition, it is setting up a new capacity of 15,000 mega-volt-amperes to achieve this target, which will start commercial generation in May 2025.
The company is also expanding its high-voltage transformer capacity by an additional 22,000 mega-volt-amperes. This facility will start production by February 2026 and thus begin contributing to revenues.
Beyond capacity addition, it is expanding into the renewable energy segment, increasing its focus on exports, optimising resource mobilisation, and imbibing technology. The company believes these initiatives will fuel its next growth phase.
The company trades at a PE of 74x, much higher than the 10-year median PE of 32, primarily due to valuation re-rating. Comparatively, it trades at a discount to CG Power (90x) and a premium to ABB (57x).
Conclusion
Over the past five years, PG Electroplast and Transformers & Rectifiers have created exceptional wealth, driven by strong demand, sectoral tailwinds, and execution.
Their ability to scale operations, improve margins, and capitalise on policy and industry shifts has been key to their performance.
Going forward, both companies continue to invest in capacity expansion and new growth areas, indicating confidence in future demand.
However, much of the optimism appears to be priced in, as seen in their current valuations, which are above historical averages.
Remember that investing in high-valued stocks comes with the risk of an earnings slowdown, which could lead to a sharp price decline.
Disclaimer
Note: We have relied on data from throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
About the Author: Madhvendra has been deeply immersed in the equity markets for over seven years, combining his passion for investing with his expertise in financial writing. With a knack for simplifying complex concepts, he enjoys sharing his honest perspectives on startups, listed Indian companies, and macroeconomic trends.
A dedicated reader and storyteller, Madhvendra thrives on uncovering insights that inspire his audience to deepen their understanding of the financial world.
Disclosure: The writer and his dependents do not hold the stocks discussed in this article.
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