Multibagger: This penny stock surged 307% in last 1 year, 1215% since March 2020; should you invest?
Penny stock Shekhawati Poly-Yarn has soared almost 307 percent in this period, from ₹0.65 in March 2023 to currently trade at ₹2.63. Meanwhile, in the last 4 years, since March 2020, the stock has given multifold returns, skyrocketing 1215 percent from ₹0.2.
Shares of polyester manufacturing firm Shekhawati Poly-Yarn have given stellar returns to their investors in the last 1 year. This penny stock has soared almost 307 percent in this period, from ₹0.65 in March 2023 to currently trade at ₹2.63. Meanwhile, in the last 4 years, since March 2020, the stock has given multifold returns, skyrocketing 1215 percent from ₹0.2.
However, in 2024 year-to-date (YTD), the stock is up a little over 44 percent, giving positive returns in 2 of the 4 completed months. It jumped almost 14 percent in April so far after a 4.4 percent fall in March and a 13.5 percent decline in February. Meanwhile, it rallied 53 percent in January this year.
The stock hit its 52-week high of ₹2.63 in intra-day deals today, April 8, 2024. It has now soared around 472 percent from its 52-week low of ₹0.46, hit on September 7, 2023.
Read here: ₹1.50 to ₹87: Penny stock turns multibagger in 10 years. Shares rise 5700%
Shekhawati Poly-Yarn Limited engages in the manufacture and sale of polyester texturised, and twisted yarns and knitted fabrics in India. Founded in 1990, it manufactures Texturising Yarn, Twisting Yarn and various Knitted Fabrics (including Sarina, Lycra, Bright, Spun Lycra, and Cationic) for both domestic and international markets. The company’s products are used in the weaving of fabrics to manufacture suiting, shirting, dress materials, saris, hosieries, knitted fabrics, zipper fasteners, curtains, and industrial cloth products, as well as to manufacture fancy yarns for dress materials and upholstery.
Earnings
In the December quarter, the net profit of Shekhawati Poly-Yarn was at ₹2.36 crore as against a net loss of ₹2.66 crore during the previous quarter ended December 2022. However, its revenue in the quarter ended December 2023 declined almost 49 percent to ₹13.11 crore versus ₹25.53 crore in the corresponding quarter last year.
Read here: Multibagger! Penny stock Blue Chip India soared 2600% in 4 years, 671% in 1 year
Brokerage view
According to ICICI Direct, Shekhawati Poly-Yarn exhibits several strengths, like growth in its quarterly net profit with increasing profit margin on a YoY basis. Additionally, the stock has demonstrated strong momentum, with its price above short, medium and long-term moving averages. These strengths underscore the company's ability to generate profits, optimise capital utilisation, and deliver value to its shareholders.
Meanwhile, its weaknesses, as per the brokerage, are -
- Inefficient use of assets to generate profits - ROA declining in the last 2 years
- Declining revenue every quarter for the past 3 quarters
- Low Piotroski Score: Indicating a company with weak financials
Read here: Over 15000% returns in 4 years! This multibagger stock turned ₹1 lakh into ₹1.5 crore
About penny stocks
Investing in penny stocks can offer potentially high returns, but it's essential to recognise the significant risks involved. These stocks may not be suitable for all investors, particularly those who are risk-averse. Only individuals comfortable with high-risk investments and willing to allocate a small portion of their portfolio should consider them. Seeking advice from a financial advisor before making any decisions is strongly recommended.
Penny stocks present several challenges. They are often small, obscure companies with minimal analyst coverage and limited publicly available information. Additionally, the lack of transparency and access to management insights complicates investment decisions further.
Read here: Multibagger! Up over 1200%, penny stock Frontier Capital turned ₹10,000 into ₹1.32 lakh in just a year
Moreover, penny stocks are prone to various risks, including illiquidity, high-impact costs, and difficulties associated with low trading volumes. Unless there are compelling reasons supported by thorough research, investing in penny stocks is generally not advisable for serious, long-term investors seeking stability and growth in their portfolios.
Disclaimer: This story is for educational purposes only. Please speak to an investment advisor before making any investment decisions.
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