Multibagger stock: This share went up 1,400% in a year, despite subdued results, regulatory leash

Despite reporting subdued financial performance during the current financial year as well as the previous fiscal, the stock of Jindal Photo, a part of the B.C. Jindal Group, has grown 1400% in the past year. It surged from ₹27.20 on January 21, 2021, to ₹408 intraday today. In comparison, the BSE Sensex climbed 19% during the period under review. The firm is the holding company for investments in the securities of group companies.

An investment of ₹1 lakh in this multibagger stock at ₹27.20 apiece on January 21, 2021, it would have become around ₹15 lakh at present.

However, investors must exercise due caution before investing in this stock as it has been placed under long term additional surveillance measure (ASM) stage 1 category on the BSE. The ASM framework is imposed by the exchange to secure retail investors from extreme volatility in the stock price and excessive speculation. It may be noted that that the shortlisting of securities under ASM is purely on account of market surveillance and it should not be construed as an adverse action against the concerned company.

With a market capitalisation of ₹418.54 crore, the microcap stock has delivered strong returns in short as well as long-term basis. The stock has surged more than 1,200% in three years, 406% in 5 years, and 164% during the ten-year period.

In the last six month, Jindal Photo shares have gained more than 450%, while it rose 41% over the last one month. The stock has been gaining for the last 12 sessions and has risen 58% in the period amid speculation about delisting the company’s shares from the stock exchanges.

In an exchange filing on December 13, 2021, Jindal Photo said that its board had received approval from promoter groups to voluntarily delist the equity shares of the company from the BSE and the NSE and consequently acquire all stocks held by public shareholders. The indicative price for delisting of share is ₹269 per share.

As per the latest shareholding pattern available on the BSE, promoter groups own a majority stake of 72.72% in the company, while foreign portfolio investors hold 0.2% shares, while the rest is owned by individual shareholders.

On Friday, Jindal Photo share price opened higher and hit an upper circuit limit of 5% at ₹408 apiece. The stock is trading higher than 5-day, 20-day, 50-day, 100-day, and 200-day moving averages, as per stock research platform Markets Mojo.

Stock defies weak earnings

Jindal Photo shares have witnessed a strong rally in the last one year even though its financial performance failed to meet market expectations. For the financial year ended March 31, 2021, Jindal Photo reported a net loss of ₹4.42 crore compared to loss of ₹3.35 crore in the previous fiscal. However, total income nearly doubled to ₹0.37 crore as against ₹0.19 crore in the prior year.

For the quarter ended September 30, 2021, the company posted a net loss of ₹1.07 crore as compared to net profit of ₹0.93 crore in the same quarter last year. Net sales increased marginally to ₹0.04 crore in Q2FY22, from ₹0.03 crore in the corresponding period last year. On the operating front, EBITDA (earnings before interest, taxes, depreciation, and amortisation) stands negative at ₹0.08 crore in September 2021 from ₹0.04 crore in the previous corresponding period.