Shares of this penny stock have given generous returns to its investors in the last 2 years. Khaitan Chemicals and Fertilizers has risen from around ₹5 in March 2020 to currently trade around ₹124, surging as much as 2206 percent just in this period.
An investment of ₹10,000 in the stock in March 2020 would have turned to ₹2.3 lakh currently.
However, it is important to note that penny stocks are highly risky investments and investors with very high-risk appetites and a firm knowledge of stock markets should only consider investing in such stocks. Investors with low-risk appetites should stay away from such stocks. One should not buy or sell any stock without contacting his/her financial advisor.
Khaitan Chemicals & Fertilizers Limited is a manufacturer of straight inorganic fertilizers. It has three segments: Fertilizers and Chemicals, Agri and Others. It is engaged in the manufacturing of single super phosphate (fertiliser), sulphuric acid (chemical) and soya edible oil.
The company has jumped 115 percent just in 2022 YTD and it up around 20 percent in March till date. The stock, which has a market capitalisation of ₹1,196 crore, hit its 52-week low of ₹20.55 on April 28, 2021, and touched its 52-week high of ₹129.60 on March 15 this year.
The recent surge in the company is on the back of robust earnings results and strong fundamentals.
In the December 2021 quarter, the company's net profit surged 362 percent to ₹28.97 crore against ₹6.27 crore in the corresponding quarter of the previous fiscal. Its sales also rallied 151 percent to ₹273.10 crore in Q3FY22 against ₹108.75 crore in the year-ago period.
On an annual basis, its net profit rose 64.92 percent to ₹24.87 crore in FY21 against a profit of ₹15.08 crore in FY20. Sales also climbed 11.45 percent to ₹487.12 crore in FY21 versus ₹437.11 crore in FY20.
Earlier this year, India Ratings and Research (Ind-Ra) assigned the firm, a Long-term Issuer Rating of ‘IND A-’. The Outlook is Stable.
Ind Ra expects that a higher-than-expected increase in the plant utilisations coupled with higher-than-expected margins, and timely receipt of subsidy leading to a comfortable working capital cycle all on a sustained basis would be positive for the ratings.
However, 65 percent of analysts polled by Mintgenie find the stock 'extremely risky'.
Note: This story is for educational purposes only. Please speak to an investment advisor before making any investment decisions.