Market in trouble? Pff… 23 penny stocks surge up to 5x in 2022

NEW DELHI: When you look at headline indices, it is easier to see that making money has become very difficult on Dalal Street. Nifty and Sensex are down about 2 per cent due to increasing geopolitical tension and fears of monetary tightening.

However, there is a block of the market that is untouched from such worries and is in a secular uptrend — the so-called penny stocks. As many as 23 stocks in this block have more than doubled investor wealth, with some multiplying even five-fold in the current calendar.

Penny stocks are those scrips that have share prices below Rs 10. We have considered only those stocks that were priced less than Rs 10 at the start of the year. The list includes even those names that are priced more than Rs 10 today due to appreciation.

Kaiser Corporation, which runs a printing press for small and medium corporate companies, is the biggest gainer among them, surging 409 per cent so far this year. The company reported Rs 17 lakh of revenue for the December quarter, with profit coming in at Rs 1.33 lakh. Before this, it was incurring losses.

Among other top gainers are BLS Infotech, Khoobsurat, MPS Infotecnics, Madhusudan Securities, Kiran Syntex and Innovative Ideals and Services (India) that have gained 200-400 per cent in the last 50 days.

Many of these stocks have been clocking upper circuit limits almost every day. Trade volume is also minuscule, making them illiquid for retail investors to trade in. Some of these are also facing insolvency proceedings.

Not surprisingly, none of these stocks is covered by Dalal Street analysts as they believe most of these stocks are operator driven and there is hardly any fundamental basis for their superlative performance.

Meteoric rise of IPO financer
In the overall market, the biggest gainer this year so far is KIFS Financial Services, surging 600 per cent so far, meaning a seven-fold increase since the beginning of the year. The company is engaged in providing loans against securities, especially financing initial public offer (IPO) bids.

IPO financing has emerged as a lucrative business for financial services companies as a number of new companies debuted on the exchanges in recent few months, and high net-worth investors rushed to invest in them, mostly by availing loans.

In the December quarter, the company said its profits stood at Rs 1.2 crore for the December quarter, against Rs 40 lakh in the same quarter the previous year. Revenue for the company also increased over three-fold during the quarter.

Among other names that have risen more than 400 per cent so far in 2022 are Shanti Educational Initiatives, Sejal Glass, Maitri Enterprises, Tine Agro and ARC Finance.

Please note that investing in penny stocks can be extremely risky. This article is just for informational purposes and not financial advice. Consult your financial advisor before investing in such names.