Vikas Proppant & Granite was a multibagger in 2018-19. The stock soared from Rs 0.80 on July 6, 2018 to Rs 8.70 on March 7, 2019.
The reason Vikas Proppant became a multibagger is because it entered a new, niche business segment, namely, the proppants manufacturing business.
Proppant is used in “fracking” or hydraulic fracturing in petroleum production, the same process in which guar bean is used to create a gel-like ingredient to thicken the fracturing fluid, which suspends “frac sand” and carries it to the cracked rock.
Fracking has been described as the biggest 21st century innovation in oil mining.
It has led to a huge surge in demand for guar seeds in India in recent years for use in US shale gas production.
Vikas Proppant has been in the guar gum industry for a long time now. It runs a 4,050-tonne capacity guar powder plant close to Kandla.
There is also huge demand from oil drillers like ONGC.
The promoters have increased holding to 24.70 per cent, which shows confidence in future prospects.
Unfortunately, as crude prices plunged, the demand for guar seeds has also plunged.
However, if the crude oil prices rise and oil mining becomes profitable, Vikas Proppant can again become a multibagger.
Discl: Invested.