Shares of SEL Manufacturing Company have given tremendous returns of over 3,000 percent to its investors in the just in 2022 year-to-date. It has jumped from around ₹44 to ₹1,474 in 2022 YTD, rising as much as 3,220 this year. In comparison, the benchmark Nifty is down around 0.2 percent in 2022 YTD.
An investment of ₹10,000 in the stock on December 31, 2021, would have turned to ₹3.32 lakh currently.
The stock is a smallcap firm with a market cap is ₹5,130 crore.
SEL Manufacturing Company is an integrated multi-product textile company. It engages in the spinning, knitting, and processing of yarns and fabrics in India and internationally. It offers terry towels, such as beach towels, bath towels, kitchen towels and Christmas towels. It was founded in 1969 and is based in Ludhiana.
But one must note that it is a loss-making one. Of the last eight financial years, the firm has reported losses in seven of them.
In the December quarter (Q3FY22), the firm's net loss narrowed to ₹28.30 crore against a loss of ₹49.38 crore in the year-ago quarter. Sales, however, rose 45.63 percent to ₹117.29 crore in the December quarter against ₹80.54 crore in the December quarter of 2020.
Meanwhile, on an annual basis, net profit came in at ₹2,507 crore for FY21 against a loss of ₹587.37 crore in FY20 but sales slipped to ₹190.38 crore in the last fiscal against ₹352.62 crore for the fiscal ended March 2020.
As per the latest shareholding data, FIIs' holdings also remained unchanged at 0.13 percent in the December quarter, however, institutional investors reduced holdings from 24.17 percent to 23.70 percent in the quarter ended December 2021. Promoters' holdings remained at 75.27 percent stake and public shareholders owned 24.73 percent in Q3FY22.
Only 13.5 percent analysts polled by MintGenie consider this stock to be of 'low risk'.
However, it is important to note that smallcap stocks are very high-risk stocks and investors should mostly avoid such stocks and only very high-risk investors with a fundamental knowledge of the markets should consider investing in them. While they give massive returns in small periods, the risks associated are also excruciatingly high. Also, investors must consult their financial advisors before buying these stocks.
Disclaimer: This story is for educational purposes only. Please speak to an investment advisor before making any investment decisions.