Shares of IT solutions firm Cressanda Solutions have given stellar returns to its investors in the last 1 year. This penny has soared 1,660 percent in this period, from ₹2 in October last year to currently trade at ₹34.
An investment in this stock of ₹10,000 last year would have turned to 1.76 lakh currently.
In 2022 YTD as well, the stock has given multibagger returns to its investors. It has surged 425 percent from ₹6.5 in December 2021.
In the 10 months of 2022, the stock has been positive in 5 of them while giving negative returns in the remaining 5. It has more than doubled investor wealth in March and April 2022, rising 156 percent and 123 percent, respectively. Meanwhile, it rose 30 percent in February 2022, 13 percent in July 2022 and 3 percent in September 2022.
However, the stock lost 24 percent in May, 12 percent in January, 5.5 percent in August, 1.5 percent in June and finally 2.3 percent in October so far.
Cressanda Solutions provides software, digital media, and information technology (IT) enabled services. Its software services include onsite-offshore development of various business applications, IT consulting, and offshore application development, maintenance, testing, and migration services. The company was incorporated in 1985 and is based in Mumbai, India.
Recently, the firm informed that it has entered into an agreement with a large institutional client for providing tech-powered infrastructure solutions towards unaddressed passenger experience in India. It noted that it will play a pivotal role in managing the entire operations of this prestigious project with an estimated value of ₹15,000 million in a fully functional year.
"The company is poised to innovate, design and deliver large business projects with technology and software services at its core. The software services include development of business applications, data Sciences, cloud, migration, business process optimization, digital media, technology implementation & maintenance services," a statement said.
In the June quarter, the firm reported a multifold rise in its earnings. Its net profit rose 1,264 percent to ₹72 lakh following a nearly 23,000 percent surge in its total income at ₹18 crore. Its total income in the year-ago period was just ₹8 lakh.
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.