Multibagger Stock: Alphalogic Techsys surges over 3600% in 3 years, up 271% this year so far; should you invest?

Software and IT services firm Alphalogic Techsys has given stellar returns to its long-term investors. It has soared 3691 percent in the last 3 years, from ₹6.49 in May 2021 to ₹246.05 currently, its new high.

The scrip has also given multibagger returns this year so far as well as in the last one year. It skyrocketed over 271 percent in 2024 YTD from ₹66.27 in December 2023 to touch its record high of ₹246.05. It has hit its 5 percent upper circuit 18 times in the last 19 sessions including today.

Meanwhile, it has surged over 690 percent in the last one year.

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This recent rally has led to the stock jumping 811 percent from its 52-week low of ₹27.01, hit on May 26, 2023.

This year so far, the scrip has given positive returns in 4 of the 5 months to date. The stock has rallied over 52 percent in May, after an over 103 percent surge in April. However, it fell 10.5 percent in March. Meanwhile, it was also positive in the first 2 months of this year, gaining over 24 percent in February and 8 percent in January 2024.

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About the firm

Alphalogic Techsys Limited, together with its subsidiary, provides technology consulting solutions and support services in India. It designs and develops web applications in e-commerce, e-learning, analytics, finance, entertainment, healthcare, and real estate domains. The company also offers strategy and consulting for business case identification, data discovery, and artificial intelligence platform solutions. Further, the company engages in the design, manufacturing, supply, and installation of industrial racks and storage solutions; and commerce and trade and distribution business. It serves healthcare, software-as-a-service, e-commerce, fintech, social networking, and other industries. The company was formerly known as Alphalogic Inc and changed its name to Alphalogic Techsys Limited in December 2018. The company was founded in 2008 and is based in Pune, India.

Earnings

In the December quarter (Q4FY24), the net profit of Alphalogic Techsys rose 34.5 percent year-on-year (YoY) to ₹74 lakh from 55 lakh in Q3FY23. However, sequentially its net profit declined marginally from ₹77 lakh. Meanwhile, its total income also jumped over 27 percent YoY to ₹1.63 crore in the quarter under review as against ₹1.28 crore in the same quarter last year.

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Brokerage view

According to ICICI Direct's analysis, Alphalogic Techsys exhibits several positive factors contributing to its strong momentum in the market. One of its key positives, as per the brokerage, is that the stock exhibits strong momentum, with its price trading above both short-term, medium-term, and long-term moving averages, suggesting sustained upward momentum in the stock's performance. Additionally, it is a growth stock with the promoters increasing their holding in the stock reflecting confidence in the company's prospects.

Meanwhile, its weaknesses, as per the brokerage are -

- Poor cash generated from core business - Declining Cash Flow from Operations for the last 2 years

- Declining Net Cash Flow: The company is not able to generate net cash.

- Book Value Per Share deteriorating for the last 2 years

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Investing in shares of small companies with low market capitalisation can offer significant potential for gains due to their lower stock prices. However, this investment avenue carries notable risks. Such stocks often suffer from limited liquidity, resulting in fewer transactions compared to larger companies. Additionally, they typically lack the stringent financial reporting and oversight that larger corporations undergo, making them more vulnerable to price manipulation and fraudulent activities.

Due to their restricted liquidity and diminished oversight, stocks of small companies frequently exhibit heightened volatility, which amplifies risks for investors. Therefore, conducting thorough research and implementing careful risk management strategies are imperative to navigate the uncertainties associated with these stocks and mitigate potential losses.

Disclaimer: This story is for educational purposes only. Please speak to an investment advisor before making any investment decisions.