Shares of penny stock Sindhu Trade Links have delivered stellar returns to investors, surging over 8 times in the last one year. From around ₹4 on August 30 last year, the stock has skyrocketed over 650 percent in just 1 year. In comparison, Sensex gained 2.74 percent during the period.
An investment of ₹1 lakh one year ago in the shares of Sindhu Trade Links would have grown to ₹7.5 lakh today. In 2022 YTD, the penny stock is up 18 percent. However, it has lost over 10 percent both in July as well as August. It has a market cap of ₹4,518 crore.
However, it is important to note that the scrip is included in Additional Surveillance Measures (ASM) LT stage 4 on BSE which means that the settlement of this security will be on a gross basis with a 100 percent margin on all clients and a 5 percent price band.
The stock is under surveillance due to the abnormal price variation, volatility and volume variation, etc are included in the ASM list.
Sindhu Trade Links Limited engages in the logistics, trading of oil and lubricants, and investment and finance businesses in India. The company's segments include transportation and logistics, oil, lubricants, spares and finance and investment, and power generation. The company's subsidiaries include Hari Bhoomi Communications Private Limited, Indus Automotives Private Limited, Sudha Bio Power Private Limited and Param Mitra Resources. The company was formerly known as Bhandari Consultancy and Finance Limited and changed its name to Sindhu Trade Links Limited in June 2011. Sindhu Trade Links Limited was incorporated in 1992 and is based in New Delhi, India.
In the June quarter (Q1FY23), the firm's net profit rose 126 percent to ₹5.45 crore against a loss of ₹20.75 crore crore in the June quarter a year ago. Sales of the firm grew 12 percent at ₹245.50 crore in Q1 of FY23 against ₹219.33 crore in the corresponding quarter of the last fiscal.
On a quarter-on-quarter basis, profit grew 117 percent from a loss of ₹32 crore in the March 2022 quarter. However, its sales fell 20.44 percent from ₹308.58 crore in the Q4FY22.
As per June quarter shareholding data, public shareholders held a 25.03 percent stake in the firm while 34 promoters of the firm held 74.97 percent stake.
Despite the stellar return, it is important to note that penny stocks are high-risk stocks and not suitable for investors with a risk-averse approach. Only high-risk investors should invest in such stocks and in very small weightage. Please consult your financial advisor before making any changes to your portfolio.
Challenges associated with penny stocks emanate from the fact that these are very small companies with negligible analyst coverage, very limited information on the public domain and often inaccessible insights from the management. Along with these fundamental challenges, the stock specifically is vulnerable to challenges pertaining to the security of such characteristics as the vulnerability to risks of illiquidity, impact cost and typical challenges associated with slim volumes.
Unless there is a really strong reason, investing in penny stocks is not generally recommended to serious, long-term investors.
Disclaimer: This story is for educational purposes only. Please speak to an investment advisor before making any investment decisions.