Rs 40 crore project: Multibagger stock locked in 20 per cent upper circuit as it approves capacity expansion after reporting a 787 per cent jump in net profit!

The stock gave multibagger returns of 110 per cent in just 6 months whereas BSE Sensex Index is up by 10.2 per cent.

On Monday, one of the Top Gainers on BSE, shares of Auro Laboratories Ltd were locked in 20 per cent upper circuit to Rs 131.44 per share with a spurt in volume by more than 2.82 times. The stock also made a new 52-week high of Rs 131.44 per share.

Auro Laboratories Ltd informed the Board of Directors of the company, at their meeting held today, August 23, 2023, have approved a capacity expansion in the existing unit of the company. Details below:

The company currently has an existing capacity of 1800 MT per annum for Metformin HCL. However, the existing capacity utilization is only 1200 MT per annum. The company plans to add a new capacity of 3600 MT per annum for Metformin HCL by March 31, 2024. The investment required for the new capacity is approximately Rs 40 crore. The company plans to finance the investment through internal accruals and a term loan from a bank.

The rationale for the expansion is that Metformin HCL is expected to have significant demand shortly. The global growth rate for Type 2 Diabetes disease is over 10 per cent. The company expects to meet the growing demand for Metformin HCL by expanding its production capacity.

Auro Laboratories Limited is into the manufacturing of Active Pharmaceutical Ingredients (APIs), specializing in diabetes therapy. The company also undertakes toll/custom manufacturing for API's and Intermediates on contract basis.

The company has a market cap of Rs 81.92 crore. According to the Quarterly Results, the net sales decreased by 9 per cent to Rs 10.18 crore while net profit skyrocketed to 787 per cent to Rs 0.71 crore in Q1FY24 compared to Q1FY23.

The stock gave multibagger returns of 110 per cent in just 6 months whereas BSE Sensex Index is up by 10.2 per cent. Investors should keep an eye on this micro-cap stock.

Disclaimer: The article is for informational purposes only and not investment advice.