Year-end special: Multibagger Alert! Over 50 penny stocks rally up to 1,900% in 2022

According to the data from Ace Equity, more than 50 penny stocks more than doubled investors’ wealth and zoomed up to 2,000% so far this year. Out of them, seven stocks rallied 1,000% or more with six others gaining over 500%.

Penny stocks have no defined theoretical definition. However, stocks in single digits or below Rs 10 are bracketed in this club. In this study, companies with a market cap of less than Rs 1,000 crore at the end of 2021 have been considered.

The list is topped by trading and distribution firm

, which has jumped 1,923% in the year so far. The stock rallied to Rs 56.45 on December 14, 2022, from its close at Rs Rs 2.79 on December 31, 2021.

It is followed by another trading microcap — Hemang Resources — which jumped 1,622% in the given period. The stock price moved to Rs 53.20 from Rs 3.09 in the said period.

Smallcap metal player

zoomed 1,538% as the stock price moved from Rs 2.71 to Rs 44.30 during the period under review.

(1,230% up), KBS India (1,127% up), Sonal Adhesives (1,087% up) and Beekay Niryat (997% up) are other penny stocks which delivered up to 10 times return in the year 2022 so far.

This means that an investment of Rs 1 lakh in any of these counters at the end of the previous calendar would have turned somewhere between Rs 10.97 lakh to Rs 20.32 lakh.

Variman Global Enterprises,

, Global Capital Markets, Sadhna Broadcast, and Axita Cotton have rallied between 500-700% during the given year.

Some typical characteristics of these stocks tend to be low promoter holding, huge debt, accumulated losses and poor dividend track record.

Market analysts advise investors to remain cautious over these counters, citing their limited free float, which may ultimately trap them and turn out to be wealth destroyers.

Penny stocks, owing to their small market cap and lack of interest from many investors tend to face limited float, which leads to large fluctuations in prices with limited trades, said Neha Khanna, Director, Valpro.

“The volatility can be a dampener for investors if the company is built on poor fundamentals,” she said. “Such stocks are often subject to circular trading and thus, lead to artificial bump up in price which may crash without notice when the trader exits.”

Yarn Syndicate, Standard Capital, Gallops Enterprises, BLS Infotech, Golechha Global, Infronics Systems, Swadeshi Polytex, United Leasing, Toyam Sports,

, Kore Foods, Khoobsurat, Tirupati Tyres, Mid India, , , Adcon Capital, Mefcom Capital, Triveni Glass and Swiss Military have also gained over 100% in 2022.

Filatex Fashions,

, , Gilada Finance, Arihant Tournesol, , , Mayur Floorings, SC Agrotech, PAOS Industries, SBC Exports, IL&FS Engineering, , MPS Infotecnics, Mehta Integrated, , Minolta Finance, Magnum Ventures, and Regency Trust are the remaining names in the list.

Kranti Bathini, Equity Strategist, Wealthmills Securities said that gullible retail investors become prey to stocks which are low in value, accumulating poor quality counters. “However, a real value stock may be available at higher prices.”

Value investing requires a lot of patience, which is gradually unlocked by the market over a particular period of time, he added. “Understanding the valuations of the stocks and picking up the right theme is extremely crucial while investing.”

(Data Inputs: Ritesh Presswala)


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