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This Multibagger Penny Stock From The Packaging Space Gives 26175% Return In 1-Year
This small cap company from the packaging industry has shed it penny stock status and has just hit 52-week high of Rs. 1286.95 per share in the previous week. The stock has made a remarkable rally from a price of just Rs. 4 to currently Rs. 1050.95. The stock in trade on October 21, 2021 has been locked in 5% lower circuit.
About Gopala Polyplast
Incorporated in 1984 by Somani Family, Gopala Polyplast started as a single unit of woven fabrics at Kadi. Later 10 years later, the company became public and also diversified into Garment accessories. Thereon the company's both the units have been on an expansion and modernization plant. Also later it commissioned a natural gas based captive power plant.
The company manufactures woven label and PP woven bag in India. Woven sacks are the best and the most cost effective packaging solution for industries like cement, fertilizer, sugar, chemicals, foodgrains, etc. Apart from it there are Jumbo bags which are used to pack bulk quanitities. Woven fabric which is the first stage of woven sacks, is a preferred medium for bale wrapping and rain protection in the form of Tarpaulin.
Financials
The company's financials have been improving and in the Fy 2021 its net profit surged to Rs. 63 crore, while for the last 2 years the company was incurring losses. Also, its debt to equity has been on a higher side at 1.44.
Gopala Polyplast peer companies
Among its peer companies', the stock commands the highest m-cap of Rs. 1075 crore. While other peer companies' including Kanpur Plast, RDB Rasayans, Rishi Techtex have a lower debt to equity ratio.
How the company made such substantial stock price rally?
After the company's resolution plan as submitted by Plastene India has been approved by the Gujarat- NCLT bench. And now as major of the shareholding has been in the hands of promoters and very less number of stocks are traded on a daily basis, retail investors fail to pocket in these stocks and hence the reason behind the stock's massive surge from just Rs. 4 a year back to Rs. 1550 per share now. So, the scare supply in the stock is one reason fuelling the price rise.
Thinking to bag such a stupendous stock, also note the company was booked last year owing to some large order fraud. Also, the company at one point because of the overdraft in the account and devolvement of LCs (letters of credit) led the account to become an NPA (non-performing asset). Hence low liquidity in a stock like Gopala Polyplast led it to witness a sharp rally similar to the case as seen in Ruchi Soya.
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