The penny stock fell from ₹46.80 in December 2023 to currently trade at ₹24.13, implying a decline of as much as 48.4 percent.
An investment of ₹1,00,000 in December last year would have decreased to ₹51,600 now.
The stock has already shed 9.5 percent in February so far, extending losses for the third straight month. Before this, it tanked 42.6 percent in January 2024 and almost 36 percent in December 2023.
Sanmit Infra hit its 52-week low of ₹24.13 in the previous session and has cracked almost 75 percent from its record high of ₹94.74, hit on July 18, 2023.
Meanwhile, in the last 1 year, the stock is down 64 percent.
However, in the long term, the penny stock has given multibagger returns. It has rallied 132 percent in the last 3 years, jumping from ₹10.40; and in the last 5 years, the scrip has skyrocketed over 810 percent from ₹2.65 in February 2019.
The Indian market has been very volatile and in turn given a muted performance so far in 2024, despite hitting record highs in January. While on the one hand, hopes of rate cuts in the near term, improving inflation, and decent December quarter earnings have kept the investors positive. However, consistent FPI selling, a rise in US bond yields, and weak global trends have capped the positive sentiment.
Sanmit Infra Limited engages in the distribution of petroleum in India. The company operates through three segments: Realty and Infrastructure, Petroleum, and Trading. It offers petroleum products, such as lubricants, public distribution system kerosene, furnace oil, light diesel oil, base oil, and bitumen. The company provides a microwave disinfection system for the disinfection of biomedical waste/hospital waste. In addition, it engages in the infrastructure and real estate development business. The company was formerly known as Asia HR Technologies Ltd and changed its name to Sanmit Infra Limited in July 2013. Sanmit Infra Limited was founded in 1965 and is based in Mumbai, India.
Earnings
In the December quarter, the company posted a multifold surge in its net profit to ₹262 lakh as against ₹4.56 lakh in the year-ago period. However, its total revenue from operations fell over 31 percent to ₹21.68 crore from ₹31.70 crore in the year-ago period.
Brokerage View
According to ICICI Direct, the stock has had rising net cash flow and cash from operating activity. Furthermore, the firm has also been witnessing a growth in its net profit along with a rise in its profit margin. Also, low debt is a key positive for the firm
Meanwhile, its weaknesses, as per the brokerage are –
– Degrowth in Revenue and Profit
– Declining Revenue every quarter for the past 2 quarters
Word of Caution!
Although penny stocks may allure investors with the promise of substantial returns, it’s imperative to recognise the inherent risks they carry. These stocks, distinguished by their relatively modest market capitalisation, are notorious for their pronounced volatility and speculative tendencies. Their unpredictable performance renders them unsuitable for investors inclined towards a conservative investment strategy. Consequently, it’s paramount for investors to exercise caution and diligently conduct comprehensive research before contemplating any investment within this segment.
Even for individuals with a greater appetite for risk, it’s advisable to approach with caution and restrict the proportion of high-risk assets within their investment portfolio. Diversification continues to be a cornerstone principle in managing risk, and depending solely on a solitary volatile asset class can subject investors to unwarranted uncertainties.
Disclaimer: This story is for educational purposes only. Please speak to an investment advisor before making any investment decisions.
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Published: 14 Feb 2024, 12:25 PM IST