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Once a penny stock, Rajnish Retail has delivered multibagger returns over the long term. The stock skyrocketed 1101 percent in the last year, climbing from ₹7.51 in May 2023 to a record high of ₹90.19 in today’s intra-day deals. Over the past five years, it has rallied an astonishing 12255 percent, rising from ₹0.73 in May 2019. In the last three years, the stock has soared over 6388 percent from ₹1.39 in May 2021. Year-to-date in 2024, Rajnish Retail has jumped over 43 percent. The stock provided positive returns in three of the five months so far this year, gaining 6 percent in May and surging 39.5 percent in April, despite falling 8.3 percent in March and 5.2 percent in February. In January 2024, it gained 11.5 percent. However, it’s important to note that the stock is currently trading under ESM: Stage 2.
What is ESM?
The Enhanced Surveillance Measure (ESM) is a regulatory framework implemented by the National Stock Exchange (NSE) in India to enhance monitoring and surveillance of listed companies, ensuring investor protection and market integrity. Under Stage I, securities trade through a trade-for-trade mechanism with a price band of 5 percent or 2 percent. In Stage II, trading is permitted on all trading days under periodic call auctions with trade-for-trade settlement and a 2 percent price band, whereas previously it was restricted to trading once a week.
About Rajnish Retail
Rajnish Retail Limited manufactures and trades diamonds and diamond jewelry in India and internationally. The company offers white loose diamonds, fancy cut and color diamonds, rings, earrings, pendants, bracelets, bangles, necklace sets, and nose pins. It also trades designer gold and diamond jewelry online and exports its products. The company, formerly known as Sheetal Diamonds Limited, changed its name to Rajnish Retail Limited in February 2024. Incorporated in 1994, it is based in Mumbai, India.
Financial Performance
In Q4FY24, Rajnish Retail’s net profit fell marginally year-on-year to ₹35 lakh from ₹37 lakh in the same quarter last year. Meanwhile, its total income soared 205 percent YoY to ₹4.2 crore from ₹1.39 crore.
Brokerage View
According to ICICI Direct, Rajnish Retail’s stock shows strong momentum, trading above its short-term, medium-term, and long-term moving averages, indicating sustained upward momentum. The firm also demonstrates strong annual EPS (earnings per share) growth. However, the brokerage highlights some weaknesses:
- Mutual funds decreased their shareholding last quarter.
- Poor cash generated from core business.
- Declining cash flow from operations over the last two years.
Investing in shares of small companies with low market capitalization can offer substantial gains due to their lower stock prices. However, this investment path comes with significant risks. Such stocks often face limited liquidity, resulting in fewer transactions compared to larger companies. They typically lack the rigorous financial reporting and oversight observed in larger corporations, making them vulnerable to price manipulation and fraudulent activities.
Due to their constrained liquidity and reduced oversight, small-cap stocks often demonstrate increased volatility, heightening risks for investors. Therefore, conducting thorough research and implementing careful risk management strategies are essential to navigate the uncertainties associated with these stocks and mitigate potential losses.
Key Takeaways
- Stock Market India: Rajnish Retail has seen exceptional growth, achieving multibagger status with significant returns over one, three, and five years.
- Finance: The company’s financial performance shows both growth and challenges, including a marginal drop in net profit and impressive income growth.
- Investment: While the stock’s momentum is strong, potential investors must consider its liquidity risks and recent declines in mutual fund holdings. Conducting thorough research is crucial before making investment decisions.
Should you invest? While Rajnish Retail’s impressive growth makes it an attractive option, it’s essential to weigh the risks and perform thorough due diligence.
