Penny stocks have no set definition; nonetheless stocks with prices quoting in single digit and low m-cap are classified as penny stocks. These stocks pose a higher risk owing to some of their key attributes such as high debt, low promoter holding, poor dividend history, accumulated losses etc. Now, even as the market is seeing correction and today fell by close to 2 percent on the headline indices, in the run up to record high levels, some of these penny stocks emerged as multibagger stocks. So, here we list below such stocks that showed sharp rally during the period:
1. Tata Tele Business Services Limited:
This telecommunications stock on a YTD basis has generated return of 957 percent, while 1-year return comes in at . The price of the penny scrip just 6 months back as on May 22 was at a mere Rs. 12.5 per share, implying huge gains of 572% considering last traded price of Rs. 84.05 per share on the NSE. In an otherwise weak market, the scrip hit 52-week high price today (November 22, 2021) on Bharti Airtel's announcement of new hiked tariff rates for prepaid connections.
Though the scrip saw intermittent correction and traded range bound between July to October, it again saw sharp momentum after this period.
In May this year, reports suggesting that Tata Sons will provide the necessary support system to revive Tata Tele and in the new form called Tata Tele Business Services (TTBS)- the company will extend services to SMEs, provided a boost to the company's stock price. Importantly, the company's retail mobile services were transferred to Bharti Airtel more than 2 years back in July 2019.
On November 10, 2021, the company clarified on price movement and said ".... we have always promptly intimated of any events, information, etc. required to be disclosed under Regulation 30 of the Sebi Regulations, 2015 and will continue to do so in future as and when any such event or information occurs in the Company. At this stage there is nothing further to disclose".
Care Rating in its latest report reaffirm its rating on the company's long and short term term bank facility etc. Also the continuing backing by Tata Sons- the company's promoter suggests that it shall take all necessary steps to cover up any liquidity crisis for the following next year.
Tata Tele is a small cap company that offers an array of telephony services including mobile, fixed wireless phones (FWP), public telephone booths & wireline services. To cater to the Indian youth, the company offers services under the brand name Virgin Mobile.
2. Proseed India:
From a price of Rs. 1.75 per share as on May 23, 2021 almost 6 months back, the scrip has climbed to a price of Rs. 84.15 currently. This amounts to a staggering 6-month return of 4709 percent. The stock's YTD and 1-year return are 15,200 and 23,943 percent, respectively. The stock on October 10 hit a price of Rs. 156.55 and since then has been losing ground.
Note the gains in the stock price are not in sync with the company's financials and this company is indeed a loss making entity. From last several quarters, the company is logging zero sales, while the last time it registered sales worth Rs. 0.54 crore was for the Q3 period of Fy19.
For the just concluded quarter, the company's loss widened YoY to Rs. 0.46 crore as against Rs. 0.09 crore during the same period a year ago. Sequentially also the company's net loss increased by a steep 53 percent. Major shareholding in the company is of 3 promoters who have 97 percent stake in the firm as at the end of the September quarter. For the last concluded Fy, the company registered a profit to the tune of 12.67 crore.
Proseed India underwent the corporate insolvency process (CIRP) under the Insolvency and Bankruptcy Code, following which the NCLT allowed for its resolution plan in December end.
Founded in 1991, the Hyderabad-Telangana based company formerly known as Green Fire Agri Commodities Limited is a leading Agri Bio Technology company. The company's specialities are in the field of Agri-Biotechnology nurturing farming community for increasing yield potential of the crops.
The stocks discussed above are penny stocks that carry a higher risk and hence may even offer a higher reward. Nevertheless, the story above just points to the potential run up in these stocks that even contradicted their financials. Note readers should not construe it to be a call to buy the above listed stocks.