Schneider Electric’s Stock Soars 200% in a Year: A Multibagger in the Making – What’s Next?

Schneider Electric Infrastructure’s stock has surged around 200% over the last year, delighting investors with substantial returns. The company focuses on the production, design, construction, and maintenance of advanced technological products and systems for electricity distribution. Their offerings include distribution transformers, medium voltage switchgears, medium and low voltage protection relays, and automation and distribution equipment.

Today, Schneider Electric’s stock opened at ₹815.30 per share on the BSE, reached an intraday high of ₹832.75, and a low of ₹798.75. According to Rajesh Bhosale, an Equity Technical and Derivative Analyst at Angel One, the stock has been trading within a range for weeks but has recently broken out, indicating possible positive momentum and a potential target of ₹900. He notes immediate support at ₹780.

Schneider Electric Infrastructure’s net profit increased by approximately 39% to ₹48.48 crore for the June 2024 quarter, mainly due to higher revenue, as per a BSE filing. The net profit for the quarter ended June 30, 2023, was ₹34.92 crore. Revenue for the quarter rose from ₹497.57 crore to ₹595.51 crore compared to the previous year.

Margins and Growth Factors

Elara Capital, a brokerage firm, attributed the 20% year-over-year increase in standalone revenue to better-priced orders, a strong order backlog, and efficient execution. The company’s growth was fueled by various sectors, including data centers, transmission, mining, minerals, mobility, and other electro-sensitive businesses. Equipment contributed 39% of the total income, followed by transactions at 19%, services at 13%, projects at 8%, and intergroup transactions at 22%.

According to the report, management believes the growth momentum will persist over the next three to five years, supported by initiatives like Made in India, the target of 500GW of renewable energy capacity by 2030, expansion plans in the steel and cement industries, growth in electric mobility, increased data center capacity due to data localization, the transition to 5G, generative artificial intelligence, and pump storage projects.

Order inflows for Schneider Electric Infrastructure increased by 19% year-over-year to ₹530 crore in Q1FY25, with power and gas, industrial, data centers, mobility, and metals being the primary sectors contributing to these orders, as highlighted by Elara Capital.

Thanks to a better product mix, price orders, operational efficiency, and cost optimization, the company’s gross margin improved by 360 basis points year-over-year to 39.9% in the first quarter. The EBITDA margin also grew by 380 basis points year-over-year to 13.8%, driven by gross margin improvement and operating leverage, resulting in an EBITDA of ₹81.7 crore, up 65% year-over-year.

Elara Capital anticipates that data centers will continue to be a key focus area. The annual contribution of data centers to the company’s overall revenue remains around 15%, with the industry expected to grow, driven primarily by hyperscale, co-location, and enterprise data centers.