This company's revenue skyrocketed 10x in two years: Is it a smart investment or a risky bet?

You might have spotted companies with punchy-double digit growth rates of 10, 20 or even 50 per cent in a year or two. But how often do you come across a company growing 10 times?! It is not a common sight, but Swan Energy has done it. The company, which has a diversified presence across textiles, real estate and oil & gas segments, among others, reported a 10x revenue growth between FY22 and the 12 months ending December 2023. It also posted a net profit in the last 12 months (ending December 2023) after back-to-back losses in the previous four years. This dramatic turnaround is reflected in its share price performance, which shot up nearly three times in the last one year. What led to a change in the company's fortunes? Let's find out. The forces behind the turnaround #1 The Veritas factor. The wind beneath Swan Energy's wings came from acquiring Veritas India, a chemicals, paper, polymer and rubber distributor, in FY23. It acquired a 55 per cent stake in Veritas for Rs 172 crore to use its distribution network to expand into the oil & gas space. Veritas' historical performance underscores why Swan Energy chose to invest in it. The company has managed to grow its net profit over 15 times in the past 14 years while keeping its price-to-book ratio below one for most of this period. In the last 12 months, most of Swan Energy's revenue came from Veritas. The market is optimistic that this promising acquisition will continue to boost Swan Energy's topline in the coming years. A dirt-cheap bargain Reliance Naval significantly outpaces its competitors in terms of capacity