The last Friday Sarthak Metals hit a 52 week high of Rs 179.25. The scrip has gained 38% in the last one month.
This validates what Wisdomsmith has been saying about Sarthak, that it is a high quality stock, due for a re-rating.
Even at the 52 week high, Sarthak quotes at less than 5x EV/EBITDA and less than 10x PE. Both these numbers are low for a company with ROCE > 40%. Even if the ROCE goes down over a period of time, we expect this could remain over 25%.
Sarthak is also looking to get into new areas as part of its expansion plan. The management is keen to build a plan for continued strong growth. The company is sitting on net cash of around Rs 18-20 crore, so it has the wherewithal to invest.
To reiterate, Sarthak Metals merits a good look for any investor seeking an undiscovered wealth creator, with potential for both sustained earnings growth and ratings expansion.