Once a penny stock, Rajnish Retail has given multibagger returns in the long term. The stock has skyrocketed 1101 percent in the last one year from ₹7.51 in May 2023 to touch its record high of ₹90.19 in intra-day deals today.
In the last 5 years as well, the stock has given exceptional returns, rallying 12255 percent from ₹0.73 in May 2019. Meanwhile, it has soared over 6388 percent in the last 3 years from ₹1.39 in May 2021.
Just in 2024 YTD, it has jumped over 43 percent.
This year so far, the scrip has given positive returns in 3 of the 5 months to date. The stock advanced 6 percent in May following a 39.5 percent surge in April. However, it fell 8.3 percent in March and 5.2 percent in February. Meanwhile, it was positive in the first month of this year, gaining 11.5 percent in January 2024.
However, it is important to note that the stock is currently trading under ESM: Stage 2
What is ESM?
The Enhanced Surveillance Measure (ESM) is a regulatory framework implemented by the National Stock Exchange (NSE) in India. It aims to enhance monitoring and surveillance of listed companies to ensure investor protection and market integrity.
Under Stage I, the trading of the securities is settled through a trade-for-trade mechanism with a price band of 5 percent, or 2 percent.
Under Stage II, the surveillance action permits trading on all trading days under periodic call auctions with trade-for-trade settlement and a 2 percent price band. Earlier this stage permitted trading just once a week.
About the firm
Rajnish Retail Limited engages in the manufacture and trading of diamonds and diamond jewellery in India and internationally. The company offers white loose, and fancy cut and color diamonds; rings, earrings, pendants, bracelets, bangles, necklace sets, and nose pins. It is also involved in the online trading of designer gold and diamond jewellery. The company exports its products. The company was formerly known as Sheetal Diamonds Limited and changed its name to Rajnish Retail Limited in February 2024. Rajnish Retail Limited was incorporated in 1994 and is based in Mumbai, India.
Earnings
In the March quarter (Q4FY24), the net profit of Rajnish Retail fell marginally year-on-year (YoY) to ₹35 lakh from ₹37 lakh in the same quarter last year. Meanwhile, its total income soared 205 percent YoY to ₹4.2 crore in the quarter under review as against ₹1.39 crore in the same quarter last year.
Brokerage view
According to ICICI Direct’s analysis, the stock exhibits several positive factors contributing to its strong rise in the market. One of its key positives is that the stock exhibits strong momentum, with its price trading above both short-term, medium-term, and long-term moving averages, suggesting sustained upward momentum in the stock’s performance, noted ICICI. The firm also presents strong annual EPS (earnings per share) growth.
Meanwhile, its weaknesses, as per the brokerage are –
– MFs decreased their shareholding last quarter
– Poor cash generated from core business – Declining Cash Flow from Operations for last 2 years
Investing in shares of small companies with low market capitalisation offers the potential for substantial gains due to their lower stock prices. However, this investment path comes with notable risks. Such stocks often face limited liquidity, resulting in fewer transactions compared to larger counterparts. Additionally, they typically lack the rigorous financial reporting and oversight observed in larger corporations, making them vulnerable to price manipulation and fraudulent activities.
Due to their constrained liquidity and reduced oversight, stocks of small companies often demonstrate increased volatility, heightening risks for investors. Therefore, conducting thorough research and implementing careful risk management strategies are essential to navigate the uncertainties associated with these stocks and mitigate potential losses.
Disclaimer: This story is for educational purposes only. Please speak to an investment advisor before making any investment decisions.
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Published: 16 May 2024, 04:00 PM IST
