Underpriced Penny Stock Below Rs 5 Rally Ahead of Board Meeting On Rights Issue; Do You Own?

Shares of Advik Capital Ltd rose 1.13% today, trading at Rs 2.69 per share, up from its previous closing price of Rs 2.66. The stock's 52-week high is Rs 4.35, and its 52-week low stands at Rs 2.06. With a market capitalization of Rs 122.45 crore, the company has shown exceptional profit growth, delivering a compound annual growth rate (CAGR) of 121% over the past five years. Investors have seen a 30.6% rise in the stock from its 52-week low of Rs 2.06, making it an attractive option in the micro-cap segment.

Advik Capital has informed exchanges that a Board of Directors meeting is scheduled for Saturday, September 7, 2024. The meeting will focus on approving matters related to a proposed Rights Issue. The Board is expected to discuss various aspects, including determining the Rights Issue price, payment mechanism, size, Rights Entitlement Ratio, Record Date, and other related matters. This announcement has garnered attention, as a Rights Issue could provide an opportunity for existing shareholders to acquire additional shares, typically at a discounted price.

In July, Advik Capital reported its Q1 FY25 results, showcasing impressive financial growth. Net sales increased by 49.2%, reaching Rs 227.90 crore, while operating profit surged by 89.2% to Rs 4.75 crore. Net profit saw a remarkable 235.7% increase, climbing to Rs 2.35 crore compared to the same quarter last year. For FY24, Advik Capital reported net sales of Rs 840 crore and a net profit of Rs 6 crore, further cementing its position as a fast-growing company in the financial sector.

The company's exceptional performance is reflected in its stock price, which has increased by 50% from its 52-week low of Rs 1.90 per share. As of June 2024, promoters held a 21.80% stake in the company, while the public owned 78.20%, indicating strong public interest in the stock.

In a move to diversify its business portfolio, Advik Capital announced plans to launch an Alternative Investment Fund (AIF) last year. The company will file for an AIF Category-II license with SEBI, as part of its business expansion strategy. The AIF aims to raise up to Rs 250 crore, with Advik Capital committing 10% of the fund's corpus as the sponsor. This initiative is part of the company's strategy to expand into new-age businesses that complement its existing financial services, including exploring sectors such as healthcare and technology.

Advik Capital, a Non-Banking Financial Company (NBFC) with total assets of Rs 200 crore, has ambitious plans to achieve the status of a Systemically Important Non-Banking Financial Company (SIB-NBFC) by 2025. To achieve this goal, the company is implementing a comprehensive expansion strategy. This includes broadening its business offerings, exploring new-age sectors like healthcare, and strategically enhancing existing operations to improve overall performance.

The company is also investing in strengthening its internal capabilities, particularly in areas like risk management, operations, governance, and technology. By bringing in industry experts, Advik Capital aims to fortify its position in the NBFC sector and enhance its operational efficiency.