Multibagger: Up 1232%, this penny stock turned ₹1 lakh into ₹13.32 lakh in 3 years
An investment of ₹1 lakh in this stock in January 2021 would have turned into ₹13.32 lakh now.
Penny stock Gujarat State Financial's share price has posted multibagger returns in the last 3 years, rising from ₹3 in February 2021 to around ₹40 currently. This implies a return of 1232 percent for its investors.
An investment of ₹1 lakh in this stock in January 2021 would have turned into ₹13.32 lakh now.
Gujarat State Financial Services Ltd. (GSFS) is a wholly-owned subsidiary of the Government of Gujarat in which it has 100% holding and is registered with RBI as a Non-Banking Finance Company. It has been given the mandate by the state government to manage the surplus funds of various Government of Gujarat-controlled organisations and PSUs of the state. Thus it acts as an in-house fund manager to the various state-owned entities. The company was founded in 1960 and is headquartered in Gandhinagar, India.
Read here: ₹1.13 to ₹380: Multibagger stock turns ₹1 lakh to ₹3.36 crore in 5 years
Just in 2024 YTD, the stock has soared 138 percent, hitting its record high of ₹39.96 in intra-day deals today, February 6, 2024. With this surge, the stock has already skyrocketed 589 percent from its 52-week low of ₹5.80, hit on April 5, 2023.
February is the third straight month of gain with the stock advancing 10 percent in the 4 sessions of the current month. Before this, it rose almost 96 percent in December 2023 and 64 percent in November 2023.
Meanwhile, in the last 1 year, the stock has rallied over 457 percent.
This notable uptrend reflects the strong market interest and positive sentiment for the stock, signaling a record-breaking performance for the company in the current market conditions.
Read here: NBCC: This PSU stock gained over 110% just in a month, jumped nearly 400% in a year
Earnings
The company has not yet declared its December quarter results. However, in the September quarter (Q3FY24), the company posted a net loss of ₹30.88 crore as against a loss of ₹32.56 in the same quarter last year. Meanwhile, its revenue in the September quarter came in at ₹97 lakh, up multifold from ₹9 lakh in the same quarter last year.
Brokerage view
According to ICICI Direct, the stock has witnessed strong momentum with its price above short, medium, and long-term moving averages. It is efficient in managing assets with high TTM (trailing twelve months) EPS (earnings per share) growth.
Meanwhile, its weaknesses, as per the brokerage are -
- Red flag: High-interest payments compared to earnings
- Negative breakdown third support (LTP < S3)
- Poor cash generated from core business - declining cash flow from operations for the last 2 years.
Read here: This renewable energy stock is up 10,000% in 5 years
While the stock's noteworthy returns may catch the eye, it is crucial to highlight the inherent risks associated with penny stocks. These stocks, often characterised by their smaller market capitalisation, come with a reputation for high volatility and speculative nature. Given their unpredictable and sometimes erratic behavior, such stocks are considered unsuitable for investors who favor a more risk-averse investment approach. It is prudent for investors to exercise caution and conduct thorough research before considering any investment in this category.
Even for risk-tolerant investors, it is advisable to exercise caution and allocate only a small portion of their overall investment portfolio to these high-risk assets. Diversification remains a key principle in managing risk, and relying on a single, volatile asset class can expose an investor to undue uncertainties.
Given the complexities associated with such stocks, seeking professional guidance from a qualified financial advisor is paramount.
Disclaimer: This story is for educational purposes only. Please speak to an investment advisor before making any investment decisions.
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