This Smallcap is Soaring in a Falling Market. Here’s Why… – Stock Insights News
Introduction
In a falling market like the current one, finding a stock that’s bucking the trend can be like finding a needle in a haystack. Amidst the chaos, one small-cap company is quietly making waves, and we’re excited to share its story with you. This under-the-radar company is not only surviving but thriving, thanks to its enviable capital efficiency and a track record of steady, reliable dividends.
The Company: Nirlon Ltd.
Let’s take a closer look at Nirlon Ltd., a pioneer in the manufacturing of synthetic yarns and industrial rubber products. With a current market capitalization of Rs. 4,595 crores, this company’s return on capital employed (ROCE) of 28% is a whopping 7% higher than the industry median. In simple terms, Nirlon makes a profit of 28 rupees for every 100 rupees it invests as capital in the business.
The Turnaround Story
Nirlon’s turnaround story is nothing short of remarkable. From 1988 to 2006, the company underwent a successful bankruptcy restructuring and then began developing the Nirlon Knowledge Park in 2006. Today, this 23-acre IT park in Goregaon (East), Mumbai, is home to prominent companies like JP Morgan, Citibank, and more.
The Land Behemoth
The company’s real estate holdings are vast, with a total chargeable area of approximately 3.06 million square feet. Moreover, Nirlon co-owns 75% of the undivided interest in 45,475 square feet of the Nirlon House building in prime Worli location, Central Mumbai.
The Share Price Performance
The company’s share price performance is another story to tell. From just Rs. 298 in February 2020 to Rs. 510 on February 21, 2025, Nirlon’s stock has seen a staggering 71% gain. This is an impressive feat, considering the BSE Sensex has fallen by around 7.5% in the same period.
Why Nirlon is the Next Multibagger?
So, what sets Nirlon apart from its peers? For starters, its cash flow management is top-notch, with a dividend payout of 158% and a current dividend yield of 5.10%. The company’s EBITDA has grown by 16% CAGR over the past five years, and net profits have jumped by 26% CAGR in the same period. Its financials are just as robust as its valuation, with a reasonable price-to-earnings (P/E) ratio of 21x, lower than the industry median of 31x.
The verdict
This small-cap cash cow is showing what many investors are always looking for – stability. Consistent dividends, even in tough times, make it a probable smart bet. While it may not be flashy, its performance is undeniable. Can this underdog be the ticket to reliable income and riches? Only time will tell. But having Nirlon on your watchlist could be a promising idea.
Disclaimer
Please note that we have relied on data from www.Screener.in throughout this article. In cases where the data was unavailable, we have used alternative sources. This article is meant 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 educational purposes only.
About the Author
Suhel Khan has been a passionate follower of the markets for over a decade. With expertise in sales and marketing, he is well-versed in the workings of the financial industry. His experience includes being the Head of Sales & Marketing at a leading Equity Research organization in Mumbai. Today, he spends most of his time dissecting the investments and strategies of the Super Investors of India.
