Regardless of what type of investor you are, you should keep an eye on a stock’s multi-year breakout, as it could be a sign of significant potential for the security. For example, when a stock crosses the triple-digit mark for the first time, it represents a massive breakout.

Today we present to you a stock that recently broke its multi-year resistance of ₹1,000 and could be a good addition to your watchlist.

Salzer Electronics

Salzer Electronics Limited, the largest manufacturer of cam operated rotary switches and cable ducts in India, offers customized electrical solutions in the areas of switchgear, wires and cables and power management.

The company has six manufacturing facilities in Tamil Nadu and an extensive distribution network in India and abroad. Through 40 international distributors, the company exports to over 50 countries.

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In the first quarter of the 2025 financial year, Salzer Electronics recorded a 24% increase in sales to ₹360 crore from ₹290 crore in the corresponding period last year.

This growth was mainly driven by the Industrial Switchgear and Wire & Cable businesses, which experienced relatively better market conditions. The Industrial Switchgear business contributed 52% to total revenue and grew 26% year-on-year with an operating margin of nearly 13%.

The wire and cable business contributed 43% to sales, up 31% year-on-year, with an operating margin of 5%. The building products business, which contributed 5% to sales, faces challenges due to higher outstanding sales and the reorganization of distribution partners.

Total operating profit (excluding other income) rose to ₹33 Crore in Q1FY25, up 28% from ₹26 crore in Q1FY24. Operating margin increased to 9% and profit after tax (PAT) grew by almost 45% to ₹15 Crores.

Salzer Electronics plans investments of ₹500 Crore for FY25, with ₹250 crore of this is earmarked for the smart meter factory.

Investments are also planned ₹8 crore for a 30 percent stake in Ultrafast Chargers Private Limited, an electric vehicle charger manufacturing startup.

Revenues from smart meters are expected to flow in the second half of fiscal 2025. The company expects ₹2,000 crore revenue from the business this year and about ₹10,000 crore next year. Ebitda margin for smart meters is estimated at around 14% at full capacity, with margins estimated at around 11% for FY2025.

Salzer Electronics expects revenue growth of 18-23% for the 2025 financial year, with the industrial switchgear business expected to grow by 22-23%, the wire and cable business by 18-20%, and the construction segment products by around 40%. The company also aims to improve its Ebitda margin to 10-10.5%.

How has the share performed recently?

The stock is up 3.8% in the last six days and 15% in the last month. From its 52-week low of ₹361 to touch ₹1,041 on August 23rd.

This is how Salzer Electronics compares to the competition.

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What happens next?

Salzer Electronics expects to continue its strong growth trajectory based on its robust product offering and solid brand positioning.

Given the positive outlook for domestic sales and exports, the company remains cautiously optimistic about its overall performance and aims to achieve a balanced mix of industrial switchgear and wires and cables to improve overall gross margins.

The company plans to establish a wholly owned subsidiary in Saudi Arabia, from where it currently exports to major original equipment manufacturers (OEMs). This is because the Saudi government’s Local Content Policy has increased demand for locally manufactured products, offering significant growth potential for key products such as cable ducts, connectors and rotary cam switches.

By setting up a manufacturing facility in Saudi Arabia, Salzer Electronics will be able to meet local demand and gain duty-free access to other Gulf Cooperation Council (GCC) countries. The company also plans to introduce wires and cables in the second year to expand its market presence.

Management is optimistic about growth opportunities in domestic and international markets, particularly in Australia, New Zealand and the Middle East.

Diploma

The recent breakout of this stock above ₹1,000 signals a significant shift in momentum and is attracting the attention of both long-term fundamental investors and short-term traders. The breakout is a testament to the company’s potential and also reflects the general market sentiment that could drive the stock price higher.

However, it is important to remain cautious. While such a breakout can indicate strong upside potential, it also carries risks such as possible overvaluation and unexpected market corrections.

Before making a decision, investors should carefully examine the sector and the company’s fundamentals, considering both growth opportunities and risks.

Have fun investing!

Disclaimer: This article is for informational purposes only. It does not constitute a stock recommendation and should not be treated as such.

This article is syndicated from Equitymaster.com