Penny stock SG Finserve has delivered exceptional multibagger returns in the last 4 years, surging from ₹2.8 in March 2020 to approximately ₹428 at present. This translates into an extraordinary return of 15185 percent.
If an investor had allocated ₹1 lakh to this stock in March 2020, the initial investment would have grown to ₹1.52 crore by now.
SG Finserve Limited provides broking, distribution, investment research, online trading, wealth management, investment banking, and insurance services. It also engages in investment activities. The company was formerly known as Moongipa Securities Limited. SG Finserve Limited was incorporated in 1994 and is based in Ghaziabad, India.
However, in the last 1 year, the stock has corrected a bit, declining around 14 percent. It has also shed 12 percent in 2024 YTD, giving positive returns in 2 of the 3 months this year so far.
It rose over 5 percent in the first session of April after 2 straight months of losses. It fell over 9 percent in March and over 10 percent in February this year. Meanwhile, the stock was up 2.8 percent in January this year.
Currently trading at ₹428, the stock is almost 43 percent away from its all-time high of ₹748, hit on May 26, 2023. Meanwhile, it has gained just 11 percent from its 52-week low of ₹384.95, hit last month on March 6, 2024.
The notable surge in value signifies a robust surge of market confidence and optimistic sentiment toward the stock, highlighting a remarkable feat for the company amid prevailing market conditions.
Earnings
In the December quarter (Q3FY24), the company posted a multifold 369.5 percent surge in its net profit at ₹21.6 crore as against a net profit of ₹4.6 crore in the year-ago period. Meanwhile, its total revenue from operations also soared 355 percent to ₹52.4 crore versus ₹12.4 crore in the same period last year.
Brokerage view
According to ICICI Direct’s analysis, the stock passes the majority of CANSLIM Investment criteria. The firm also has a high TTM (trailing 12 months) EPS growth as well as an overall strong annual EPS (earnings per share) growth, which also aided the sentiment.
Meanwhile, its weaknesses, as per the brokerage, are –
– Inefficient use of capital to generate profits – RoCE declining in the last 2 years
– Inefficient use of shareholder funds – ROE declining in the last 2 years
– Inefficient use of assets to generate profits – ROA declining in the last 2 years
What are penny stocks?
Penny stocks, trading at low prices, often below ₹10 per share in the Indian market, represent shares of small companies with low market capitalisation. Due to their modest size, these stocks typically face limited liquidity, leading to fewer transactions compared to larger, more established stocks. Investors are drawn to penny stocks by their potential for substantial gains, given their low price. However, this potential reward comes hand in hand with higher risks.
These speculative investments lack the stringent financial reporting and scrutiny typically associated with larger companies, making them vulnerable to price manipulation and fraud. Consequently, penny stocks exhibit high volatility, amplifying the risk for investors. Moreover, their lack of transparency and regulatory oversight underscores the importance of thorough research before investing.
While the allure of significant returns may attract investors, it’s crucial to approach penny stock investments with caution. Diligent research, thorough analysis, and effective risk management strategies are essential to navigate the uncertainties inherent in penny stock trading and minimise potential losses.
Disclaimer: This story is for educational purposes only. Please speak to an investment advisor before making any investment decisions.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it’s all here, just a click away! Login Now!
