Yes, it is in fact possible. It happened in my last patrol. A ship exploaded from oned end to the other after a torpedo hit as another ship was passing very close. The second ship also exploaded from end to end and sank. I didn't get the second as a kill on my record though.
It may help to have enhanced damage effects enabled. The ships in most convoys travel with at least 700 meters between ships unless one gets disabled. I just happeneed to have the torpedo hit while the other ship was unusually close and both were explosive.
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