Chemicals firm IEL has given exceptional returns to its long-term investors. The scrip has soared 4900 percent in the last 4 years, from ₹0.14 in May 2020 to ₹7 currently.
However, it has witnessed strong correction in the last one year and in 2024 YTD (year-to-date) as well. The stock has declined over 52 percent in the last 1 year and over 32 percent in 2024 YTD. This year so far, the stock has given negative returns in all 5 months.
It has lost almost 6 percent in May after a 9.5 percent drop in April, 10 percent in March, 7.8 percent in February and 4.5 percent in January.
On the back of the recent correction, the stock is now 66 percent away from its peak of ₹20.59, hit on June 9, 2023. Meanwhile, it is up just 5 percent from its 52-week low of ₹6.69, hit on April 4, 2024.
However, the stock has given multibagger returns of over 566 percent in 3 years, 1196 percent in 5 years and 2592 percent in a decade.
About the firm
Founded in 1956, IEL Ltd is an Indian company that has transitioned from manufacturing to trading chemicals and providing related services. Initially, the company operated a solvent extraction plant but it shifted its focus to trading chemicals and colorants and offering marketing and warehouse rental support due to competitive pressures. IEL Ltd aims to expand its export and import business in the chemicals and commodities sector, though it currently faces growth-limiting challenges. Additionally, the company seeks to diversify into developing various intermediate and derivative products for the chemical and commodity markets.
Earnings
IEL Ltd has announced a significant turnaround in its quarterly (Q4FY24) and annual (FY24) results. In Q4FY24, net sales surged by 781.5 percent to ₹9.12 crore, compared to ₹1.03 crore in Q4FY23. The company reported a net profit of ₹0.14 crore for Q4FY24, a substantial improvement from the net loss of ₹0.04 crore in Q4FY23.
Annually, IEL Ltd saw its net sales rise by 55.9 percent, reaching ₹17.26 crore in FY24, up from ₹11.07 crore in FY23. However, the annual net profit decreased to ₹0.26 crore in FY24 from ₹2.37 crore in FY23.
During the previous financial year 2023-2024, the company’s shares underwent a stock split, reducing the face value of equity shares from ₹10 to ₹1, effective September 25, 2023.
Brokerage view
According to ICICI Direct, IEL Ltd has demonstrated key positive trends, including consistent revenue growth and increasing profits for the past two quarters. Additionally, the company stands out with zero promoter pledge, indicating strong financial health and management confidence.
Meanwhile, its weaknesses, as per the brokerage, are –
– Promoter holding decreased by more than -2% QoQ
– Negative profit growth
What are penny stocks?
Penny stocks refer to shares of small companies that trade at a low price, typically below ₹10 per share. These stocks are characterised by their high volatility, low market capitalisation, and limited liquidity, making them a high-risk investment option.
Due to their low prices, penny stocks can experience sharp price movements, offering the potential for high returns but also posing significant risks. Investors in Indian penny stocks often face challenges due to the limited availability of financial information and historical performance data, making it difficult to assess the true value and potential of these companies. Despite these risks, penny stocks attract investors looking for opportunities to capitalise on the rapid growth potential of small, emerging companies.
Disclaimer: This story is for educational purposes only. Please speak to an investment advisor before making any investment decisions.
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Published: 22 May 2024, 04:18 PM IST
