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A Penny Stock Creating new highs Knowledge Marine and Engineering Works Limited

A Penny Stock Creating new highs Knowledge Marine and Engineering Works Limited
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A stock trading at a price of Rs 271 on the 21st of July 2022 has jumped to a price tag of Rs 392 on the 25th of July 2022, giving almost a 45% return in a span of 5 days including a weekend that happens to be a penny stock.

Hey guys! My name is Nirmal and here I am with yet another stock that has delivered tremendous returns in a short span of time but how long is this momentum going to continue? Yes, I am talking about a company known as Knowledge Marine and Engineering Works Limited.

A return of 670% in the last year is mind-blowing!

Knowledge Marine and Engineering Works Limited

Company Profile

As the name suggests, the company is majorly in the business of marine crafts. They own a fleet of 7 marine crafts out of which 3 are under construction. Talking about, being constructed, a major part of the business comes from the engineering and works services to the marine crafts. They do take care of the maintenance part as well.

In the financial year 2020-21, the company secured an order book of over 100Cr including a few long-term contracts from Kolkata Port, Vishakhapattanam Port, etc. They have a few long-term deals with Myanmar-based company also.

Key Indicators

  • Market Cap ₹ 402 Cr.
  • Current Price ₹ 392
  • High / Low ₹ 392 / 0.00
  • Stock P/E 19.7
  • ROCE 69.4 %
  • ROE 75.4 %

The Company has a total market capital size of Rs 402 crores making it a very small company considered to be a penny stock. Making it such a small company, trading at a price of Rs 392 is an all-time high again. This all-time high has recently surpassed the resistance of the 300 mark and becoming a new high.

Leaving all this behind, Knowledge Marine and Engineering Works Limited is trading at a PE Ration of 19.7 giving another advantage. And, all in all, the Return of Equity and Return on Capital Employed both being above 60% are unbeatable. This is not all, the ROCE has been consistently at 58% for the last 3 years.

knowledge marine peers

It’s a small industry where the biggest company has a market cap of 5000 Cr only. So, after Mazgaaon Dock and Cochin Shipyard stand as two giants at the top, Garden Reach is there followed by our star performer Knowledge Marine and Engineering.

Revenue and Profit Growth

Sep 2020 Mar 2021 Sep 2021
Sales 16 17 19 42
Expenses 10 10 12 17
Operating Profit 7 7 8 25
OPM % 41% 38% 40% 59%
Other Income 0 0 0 0
Interest 1 1 1 2
Depreciation 1 1 1 1
Profit before tax 5 4 6 22
Tax % 25% 31% 24% 26%
Net Profit 4 3 4 16
EPS in Rs 15.20 2.96 4.05 15.83

*The last column represents Mar 2022 data

Looking at the half-yearly data of the company, growth in the sales is visible for every six months figure going from 16 Cr to 17 Cr, rising to 19 Cr and then jumping to 42 Cr. Despite the growth in sales, the Operating expenses are very much controlled giving more operating margins and operating profits. Net Profit and EPS have become 4 times in March 2022 from the previous averages.

Mar 2018 Mar 2019 Mar 2020 Mar 2021 Mar 2022
11 11 24 33 61
8 6 16 20 29
Operating Profit 3 4 8 13 32
OPM % 24% 41% 32% 39% 53%
0 0 0 0 1
Interest 0 1 1 1 2
Depreciation 0 1 2 2 2
Profit before tax 2 3 5 9 28
Tax % 34% 10% 20% 28% 25%
Net Profit 1 2 5 7 20
EPS in Rs 1,320.00 7.60 18.16 6.72 19.89

In a span of five years, from 2018 to 2022, there is a continuous move to the upside in the sales data. From March 2021, the sales doubled from 33 Cr to 61 Cr in March 2022. There is a significant increase in the Operating Profit Margin as well from 39% to 54% from the year 2021 to 2022. Net Profit and EPS have tripled from 2021 to 2022.

There is a compounded sales growth of 795 in the last 3 years which is projected to be more than 80% again from the current year. This gives strength as the company is continuously getting new orders and executing them. Then the compounded profit growth for last years has been 120% which is projected to be almost 2005 for the current financial year.

Not much, but there is a significant amount of debt worth Rs 17 Cr against the Reserves of 17 Cr.

Shareholding Pattern

Mar 2021 Sep 2021 Mar 2022 Jun 2022
73.27 73.27 73.27 73.27
Kanak Sujay Kewalramani 39.38 39.38 39.38 39.38
Pinkesh Pritam Kewalramani 14.65 14.65 14.65 14.65
Saurabh Mukesh Daswani 14.65 14.65 14.65 14.65
Dinesh Mohanlal Kewalramani 4.58 4.58 4.58 4.58
Bharti Mukesh Daswani 0.00 0.00 0.00 0.00
Mukesh Vishindas Daswani 0.00 0.00 0.00
Pankaj Gurbani 0.00 0.00 0.00 0.00
26.73 26.73 26.73 26.73
Mahalaxmi Brokerage (India) Private Limited 3.11 3.55
Gautam Prabhudas Nankani 2.58 2.58
Zain Aslam Don 1.91
Siddarth S Malik 1.08 2.64
Monika Khandelwal 1.58
Hem Finlease Private Limited 1.41
Parmanand Karamchandani 1.29 1.29
Jaya Karamchandani 1.29 1.29
Kishore Kumar Girdharilal 1.26 1.26
Prateek Jain 1.17 1.17
Asif Ibrahim Dadarkar 1.17
Gaurav Jain 1.17 1.13
Sahil K Khatri 1.20 1.02

There is no change in the shareholding pattern affecting any change in the promotor’s share.

Knowledge marines chart

The chart for Knowledge Marine and Engineering Works is shown above with a daily candle being there. A support level at 300 was crossed in an absolutely crashing way.

Incorporated in the year 2015, the company has grown quite a bit and is standing at a point from where it can ever break out. I am not sure whether you should buy the stock or not but definitely, you should watch the stock.

Company Website – http://www.kmew.in/

Know more about Knowledge Marine and Engineering Works Limited

Thanks and Regards,

Nirmal Dwivedi