Multibagger! Up 525%, this penny stock turned ₹21.5 into ₹134 in just 3 years

Shares of pipe firm Electrosteel Castings have given exceptional returns to their investors in the last 3 years.

The stock surged from ₹21.5 in January 2021 to around ₹134 currently, rallying almost 525 percent in 3 years.

This implies that an investment of ₹10,000 in this penny stock in January 2021 would have turned into ₹62,500 this year.

Electrosteel Castings stock price trend

The stock has rallied in January so far, up over 13 percent, after a 6 percent fall in December 2023. Before that, it was in the green for 4 straight months between August and November 2023, soaring 100 percent.

Read here: MRPL stock soars over 17.5%, sets new record high after 16 years

In 2023, the stock gave positive returns in seven months and was in the red in 5 months. It gave double-digit returns in 6 of those 7 months it was positive in.

The stock rallied the most in November, up almost 39 percent, followed by June, up almost 28 percent and May, up over 23 percent. It was also in the green in October, August, April and September, up between 3.5 and 19 percent.

Meanwhile, it was in the red for the first 3 months of 2023, down over 16 percent in that period. It also fell around 2 percent in July and 6 percent in December.

Read here: Senco Gold share price jumps over 15%, hits new record high on strong Q3 update

The stock hit its record high of ₹134.20 earlier this week on January 8, 2024. With this new peak, the scrip has soared over 327 percent from its 52-week low of ₹31.40, hit on March 29, 2023.

Meanwhile, in the last 1 year as well, it has given multibagger returns, jumping 242 percent.

The rise in its stock price came on the back of a significant rise in its net profit and EBITDA over the past few quarters.

In the September quarter, the firm posted around 188 percent surge in its quarterly net profit at ₹184.05 crore from ₹63.93 crore in the year-ago period. Meanwhile, its net sales rose over 10 percent to ₹1,870.22 crore in September 2023 versus ₹1,697.55 crore in September 2022. Its EBITDA also jumped over 87 percent in the quarter under review to ₹330.73 crore as against ₹176.57 crore in the corresponding quarter last year.

Read here: Multibagger stock: Solar Industries shares zoomed 535% in last 3 years

About Electrosteel Castings

Electrosteel Castings Limited manufactures and supplies ductile iron (DI) pipes, DI fittings and accessories, and cast iron (CI) pipes in India and internationally. It offers DI flange, ductile iron restrained joint pipes, and ductile iron fittings. It also provides metallurgical coke, sinter, cement, sponge iron, ferro silicon, pig iron, and silico manganese ferroalloy. The company was formerly known as Dalmia Iron and Steel Ltd. Electrosteel Castings Limited was incorporated in 1955 and is headquartered in Kolkata, India.

While the stock showcased a stellar return, it's crucial to highlight the inherent risks associated with penny stocks. These stocks are characterised by their high-risk nature and are not suitable for investors who adopt a risk-averse approach. It's advisable that only high-risk investors consider investing in penny stocks, and even then, allocate only a small percentage of their portfolio to such high-risk assets. Seeking guidance from a financial advisor before making any adjustments to the portfolio is strongly recommended.

Read here: This small-cap stock gained 47% in just 3 sessions amid ‘Chalo Lakshadweep’ wave

The challenges tied to penny stocks stem from their status as very small companies, often lacking substantial analyst coverage and providing limited information in the public domain. Access to insights from the management of these companies can also be challenging.

Due to these factors, unless there is a compelling and well-researched reason, investing in penny stocks is generally not recommended for serious, long-term investors. Prudent investment decisions in this domain necessitate careful consideration of the associated risks and potential volatility, underscoring the importance of professional financial advice.

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