The Indian equity market has continued to fall sharply in January 2022 amid weak global cues and a possibility of rate hikes by the Federal Reserve. However, a few small-cap stocks have delivered multi-bagger returns for shareholders even as Sensex and Nifty continued to fall below 4%. Zodiac Energy is one such top-performing multi-bagger share.
Shares of this solar energy company have risen by 140% in 2022 on the NSE. It surged from a closing price of Rs. 60.05 on 31 December 2021 to Rs. 143.90 as of 27 January 2022. It is currently up by 4.97% to Rs. 151.05 with a market cap of Rs. 221 crores and trading volume of 10,369 as of 12:49 PM 28 January 2022.
Let us dive into the details of this company and its stock.
About the Company- Zodiac Energy
Founded by Kunjbihari Shah, this Ahmedabad-based company has worked in the solar energy business since 1992. The company designs, manufactures, and provides installation services for solar energy equipment for customers worldwide. Its products include solar photovoltaic systems, water heaters, diesel and gas generation sets, parabolic troughs, etc.
The company has completed more than 8,000 projects for over 10,000 customers providing PV solar systems, process equipment, solar water heaters etc. Its clients include Vodafone, Parle, Adani Group, Reserve Bank of India, Indian Oil, Gujarat Energy Development Agency and more.
The following is a list of services provided by Zodiac Energy:
Building-integrated photovoltaic system: This replaces glass glazing embedded in building structures.
Solar thermal: It offers solar water heating solutions for residential, commercial, and industrial complexes.
Solar PV systems: This company builds grip-connected, off-grid, and rooftop PV systems.
Diesel/gas power plants: Zodiac Energy also provides EPC (engineering, procurement, and construction) services for diesel and gas generator sets.
Emerging technologies: Includes energy storage, electric vehicles, solar water desalination.
Zodiac Energy’s Journey to NSE’s Main Board
Since its founding, it took 25 years of operation for this company to get listed on NSE’s (National Stock Exchange) Emerge platform. Stocks of SMEs (small and medium enterprises) and startups need to be on this platform before being listed on NSE’s mainboard. There are some stringent qualifications criteria that Emerge entities need to fulfill to migrate to the mainboard.
Zodiac Energy got itself listed on NSE’s Emerge in 2017 to build its credibility and trust among customers and investors. Small companies often list themselves on this platform to see their acceptance across business segments.
Following this, Zodiac followed NSE’s stringent compliance levels proving its financial discipline and adherence to regulatory compliances. This allowed the company to migrate to the mainboard in December 2021 after four years on the Emerge platform.
Businesses have to remain on NSE Emerge for at least two years to be eligible for the mainboard. They also have to possess paid-up equity capital of at least Rs. 10 crores and a capitalization value of Rs. 25 crores or more. These entities must also get listed on SEBI’s Innovators Growth Platform for a year or more.
Financial Health of Zodiac Energy
According to financial statements released for the September 2021 quarter, the company is a profitable one. It reported profits of Rs. 2.33 crores for the 6 months ending on 30 September 2021, down from Rs. 3.25 crores in the previous quarter.
Over the last five years, Zodiac Energy’s earnings have increased by 32.7%. Its earnings per share (EPS) increased by 40% over the last three years. The company reported a 36% growth in revenues to Rs. 1.2 billion over the last year. Its EBIT (earnings before interest and tax) during this period remained stable, showing steady growth.
Share Price History of Zodiac Energy
As of information on 28 January 2022, the stocks of Zodiac Energy logged a 27.52% increase in the last five sessions alone, from Rs. 124.35 to Rs. 151.05. In 2022 alone, the shares of Zodiac Energy grew by 151.54% from 63.05 on 3 January, making it a multi-bagger stock of this year on the NSE.
In the past month, the stock has grown 177.16% from Rs. 57.20 on 30 December 2021 to Rs. 151.05 on 28 January 2021. For the last quarter, this stock has increased 488.89% from Rs. 24.40 on 29 October 2021. It has increased in value by 963.73% from Rs. 13.50 since January 2021, making it a multi-bagger stock of 2021 as well.
If an investor invested Rs. 1 lakh in this share one month ago, his investment would be worth Rs. 2.77 lakhs now. Similarly, an investment of Rs. 1 lakh a year ago in Zodiac Energy would be worth Rs. 10.63 lakhs today.
The strengths of Zodiac Energy Limited include a proven track record for delivering profits and an excellent balance sheet. Moreover, the company insiders have indicated confidence in its shares by buying them. Its earnings per share have also gone higher for the past year.
At Rs. 2 billion, Zodiac Energy does not have meaningful market capitalization. The company also seems to be overvalued based on its PB ratio (7.1x) compared to the average of the Indian electrical industry.
Frequently Asked Questions
Is Insider trading of Zodiac Energy aligned with investors’ interests?
From known information, insider trading seems to be aligned with investors’ interests. There is an absence of share selling and insider purchases worth Rs. 1.7 million in the last year.
How do Zodiac Energy’s assets and liabilities compare?
Zodiac Energy’s assets far exceed its both short-term and long-term liabilities. This company has Rs. 485.37 million in short-term assets and Rs. 32.82 million in long-term assets. Whereas its short-term liabilities are worth Rs. 200.63 million, and long-term liabilities are worth Rs. 20.14 million.
How is the Indian stock market performing lately?
The Indian stock market is trading on a negative note in line with weak global cues as the Federal Reserve confirmed interest rate hike.
Disclaimer: This blog is exclusively for educational purposes and does not provide any advice/tips on investment or recommend buying and selling any stock.