Multibagger returns look lucrative and even it is more enticing if we can make it on a low priced stock. Nevertheless to identify such multibagger stocks can be really hard.
Here before getting ahead with the discussion on the stock basis the headline, let us know in brief the chief characteristics of a multibagger stock:
Definition and features of a multibagger stock:
There is no set definition for multibagger stocks but a stock is said to be multibagger when it can offer 100% or more returns in a short span i.e. to say it becomes 2X or 3X its value.
So, as far as features of a multibagger is concerned:
Small scrips: By small we mean small entities that have a chance of scaling higher are usually multibaggers say companies like HDFC Bank which have already made their mark and are on the higher side when it comes to m-cap may not reap such returns.
Hidden or unconventional stocks: These are not the conventional stock picks and so as and when there is boom in such stocks, investors shift their preference towards it and hence sharp gains.
Volatility: With risky proposition there will also be volatility as the stock shall be gradually picked and hence off and on market movements.
Now that the features of multibaggers may be precisely clear, we move into a power sector penny scrip that in the last 1-year generated 164% gains.
Jaiprakash Power Ventures: About the company
This is a small cap power-generation and distribution utility concern. Part of the infra conglomerate Jaypee Group, JP Power was incorporated in 1994. The Group has most creditable track record of implementing Hydropower projects in the Country. The company plans, develops, implements as well as operates power projects in India. As of now the company operates the largest hydroelectric power plant in the private sector in India.
JP Power-stock price trajectory
The company is a multibagger and has moved in price from levels of Rs. 2.9 as on April 26, 2021 to Rs. 7.8, resulting in 169% return. The company's YTD return and 1-month returns are at 25% and 14%, respectively.
Fundamentals improving at the concern
First and foremost this is an undervalued proposition with TTM P/E at 16.60. Also, the stock's financials have been on a continuous uptick. Total income from operations at the concern as of December quarter for Fy22 stood at Rs. 1401 crore. Also, the company has turned profitable during the period with net profits at Rs. 106.99 crore as against a net loss of Rs. 22.90 crore in the same quarter a year ago.
Also, the company has substantially reduced its debt beginning from 2020 onwards and its debt now stands reduced to Rs. 5226.77 crore from Rs. 23,416 crore in March 2018.
Implying that the concern which has turned profitable has now reduced its outgo on interest on loan heavily, a better situation for a utility company.
The stock is discussed only for its multibagger returns and is not a recommendation to buy in it. Betting on penny stocks require far more analysis as they are even more riskier.