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Business News/ Markets / Stock Markets/  Multibagger Penny Stock: IEL jumped 4900% in 4 years but declined for all 5 months this year; should you invest?
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Multibagger Penny Stock: IEL jumped 4900% in 4 years but declined for all 5 months this year; should you invest?

Chemicals firm IEL has shown exceptional returns to long-term investors, soaring 4900 percent in 4 years but faced strong corrections recently. The stock has declined over 52 percent in the last year and 32 percent in 2024 YTD, with negative returns for 5 consecutive months.

Chemicals firm IEL has shown exceptional returns to long-term investors, soaring 4900 percent in 4 years but faced strong corrections recently. The stock has declined over 52 percent in the last year and 32 percent in 2024 YTD, with negative returns for 5 consecutive months.Premium
Chemicals firm IEL has shown exceptional returns to long-term investors, soaring 4900 percent in 4 years but faced strong corrections recently. The stock has declined over 52 percent in the last year and 32 percent in 2024 YTD, with negative returns for 5 consecutive months.

Chemicals firm IEL has given exceptional returns to its long-term investors. The scrip has soared 4900 percent in the last 4 years, from 0.14 in May 2020 to 7 currently.

However, it has witnessed strong correction in the last one year and in 2024 YTD (year-to-date) as well. The stock has declined over 52 percent in the last 1 year and over 32 percent in 2024 YTD. This year so far, the stock has given negative returns in all 5 months.

It has lost almost 6 percent in May after a 9.5 percent drop in April, 10 percent in March, 7.8 percent in February and 4.5 percent in January.

Read here: Multibagger Stock: Rajnish Retail has gained over 1000% in just one year!

On the back of the recent correction, the stock is now 66 percent away from its peak of 20.59, hit on June 9, 2023. Meanwhile, it is up just 5 percent from its 52-week low of 6.69, hit on April 4, 2024.

However, the stock has given multibagger returns of over 566 percent in 3 years, 1196 percent in 5 years and 2592 percent in a decade.

About the firm

Founded in 1956, IEL Ltd is an Indian company that has transitioned from manufacturing to trading chemicals and providing related services. Initially, the company operated a solvent extraction plant but it shifted its focus to trading chemicals and colorants and offering marketing and warehouse rental support due to competitive pressures. IEL Ltd aims to expand its export and import business in the chemicals and commodities sector, though it currently faces growth-limiting challenges. Additionally, the company seeks to diversify into developing various intermediate and derivative products for the chemical and commodity markets.

Read here: 1.58 to 55: Penny stock turns multibagger. Rises 3400% in four years

Earnings

IEL Ltd has announced a significant turnaround in its quarterly (Q4FY24) and annual (FY24) results. In Q4FY24, net sales surged by 781.5 percent to 9.12 crore, compared to 1.03 crore in Q4FY23. The company reported a net profit of 0.14 crore for Q4FY24, a substantial improvement from the net loss of 0.04 crore in Q4FY23.

Annually, IEL Ltd saw its net sales rise by 55.9 percent, reaching 17.26 crore in FY24, up from 11.07 crore in FY23. However, the annual net profit decreased to 0.26 crore in FY24 from 2.37 crore in FY23.

During the previous financial year 2023-2024, the company's shares underwent a stock split, reducing the face value of equity shares from 10 to 1, effective September 25, 2023.

Read here: Multibagger Stock: Alphalogic Techsys surges over 3600% in 3 years, up 271% this year so far

Brokerage view

According to ICICI Direct, IEL Ltd has demonstrated key positive trends, including consistent revenue growth and increasing profits for the past two quarters. Additionally, the company stands out with zero promoter pledge, indicating strong financial health and management confidence.

Meanwhile, its weaknesses, as per the brokerage, are -

- Promoter holding decreased by more than -2% QoQ

- Negative profit growth

What are penny stocks?

Penny stocks refer to shares of small companies that trade at a low price, typically below 10 per share. These stocks are characterised by their high volatility, low market capitalisation, and limited liquidity, making them a high-risk investment option.

Read here: Multibagger Stock: ACE Software Exports soars 300% in 2024 so far to hit new high

Due to their low prices, penny stocks can experience sharp price movements, offering the potential for high returns but also posing significant risks. Investors in Indian penny stocks often face challenges due to the limited availability of financial information and historical performance data, making it difficult to assess the true value and potential of these companies. Despite these risks, penny stocks attract investors looking for opportunities to capitalise on the rapid growth potential of small, emerging companies.

 

Disclaimer: This story is for educational purposes only. Please speak to an investment advisor before making any investment decisions.

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Published: 22 May 2024, 04:18 PM IST
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