Four stocks within the Murugappa Group have showcased an impressive performance, yielding over a 50% return in the current year so far. The Group is one of the leading business conglomerates in India, with a history spanning over 100 years.
It has a diverse range of businesses, including engineering, abrasives, finance, farm inputs, bio-products, bicycles, auto components, and plantations. The group has 28 businesses, of which 10 are listed on the stock exchanges
In a significant development, the Murugappa family resolved internal disputes with the announcement of a settlement agreement in August this year. This settlement brought an end to the conflicts that emerged following the passing of MV Murugappan on September 19, 2017. After his demise, a dispute arose between Valli Arunachalam, his eldest daughter, and the rest of the family members.
Among group stocks, Wendt India has emerged as the top performer, with a return of over 80%. The company is a leading manufacturer of super abrasives, machining tools, and precision components. In the current year so far, the stock has soared from ₹7,570 apiece to ₹13,921, resulting in a gain of 84%.
In October, the stock crossed the ₹15,000 mark for the first time and set a historic high of ₹15,600 apiece. From the March 2020 low of ₹1,611, the stock saw a significant rally, gaining 764% to date. Wendt India was the most expensive stock among other Murugappa Group stocks.
Cholamandalam Investment and Finance (CIFC), the financial services arm of Murugappa Group, was next on the list. The company shares have witnessed a strong spike this year, moving from around ₹723 apiece to the current value of ₹1,249, representing a return of 73%.
This exceptional performance has been seen since CY20, when the stock recorded a massive 26.24% return. In the subsequent years, CY21 and CY22, the stock posted returns of 34.90% and 39.24%, respectively.
What’s even more impressive is that the shares have shown remarkable consistency, concluding 10 out of the last 13 years in positive territory and delivering steady returns to their investors. Among these, 2014 stands out as the best yearly performance, with a return of 94.14%.
In its latest report, domestic brokerage firm Motilal Oswal retained its ‘buy’ call on the stock with a target price of ₹1,420 apiece. The brokerage believes that the company will continue to grow faster than its peers over the medium term, aided by a diversified product suite and a gradual improvement in market share.
Given the company’s focus on diversification, the brokerage believes CIFC could enter new retail product segments in the near-to-medium term.
“With its ability to deliver industry-leading loan growth, its strong asset quality (estimated credit cost of ~1.2% over FY25–26), and its healthy RoE of ~21-22%, we believe CIFC would continue to command premium valuations relative to its NBFC peers, the brokerage added.
Further, shares of CG Power and Industrial Solutions have also given stunning returns to their shareholders this year. The shares, which were trading at 265.60 apiece, have grown by 75.54% to ₹466.25. Taking the stock’s CY19 low price of ₹8.25 apiece, the stock has grown exponentially, delivering 5551% to date.
Finally, Shanthi Gears, an industrial gearing solutions company that designs and manufactures gears, gearboxes, geared motors, and gear assemblies, delivered a return of 51.27% in CY23.