Multibagger! Up over 1200%, penny stock Frontier Capital turned ₹10,000 into ₹1.32 lakh in just a year

Penny stock Frontier Capital has delivered extraordinary multibagger returns just in the last 1 year, surging from ₹2.5 in March 2023 to approximately ₹33.2 at present. This translates to an impressive return of nearly 1228 percent.

If an investor had allocated ₹10,000 to this stock in March last year, the initial investment would have grown to ₹1.32 lakh by now.

Frontier Capital Limited, a non-deposit-taking non-banking finance company, engages in the business of granting loans and advances in India. The company was formerly known as Frontier Leasing and Finance Limited. The company was incorporated in 1984 and is based in Mumbai, India. Frontier Capital Limited is a subsidiary of Inimitable Capital Finance Private Limited.

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The stock has surged around 118 percent in 2024 YTD, giving positive returns in 2 of the 3 months this year so far.

It has shed 6 percent in March so far, snapping after 7 straight months of gains since August 2023. Between August 2023 and February 2024, the stock soared 981 percent.

Meanwhile, it rallied 501 percent in February and almost 54 percent in January this year.

Currently trading at ₹33.21, the stock is over 18 percent away from its all-time high of ₹40.58, hit earlier this month on March 12, 2024. Meanwhile, it has skyrocketed 1437 percent from its 52-week low of ₹2.16, hit on April 6, 2023.

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The notable surge in value signifies a robust surge of market confidence and optimistic sentiment towards the stock, highlighting a remarkable feat for the company amid prevailing market conditions.

Earnings

In the December quarter (Q3FY24), the company posted a 17 percent decline in its net profit at ₹2.9 lakh as against a net profit of ₹3.3 lakh in the year-ago period. Meanwhile, its total revenue from operations also fell almost 23 percent to ₹6.1 lakh versus ₹7.9 lakh in the same period last year.

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Brokerage view

According to ICICI Direct's analysis, the company is currently observing a surge in net cash flow and cash generated from its operational activities. Additionally, it is a company with low debt and has also been able to generate and improve its net cash flow in the last 2 years, which are again key positives, said the brokerage.

Meanwhile, its weakness, as per the brokerage, is its degrowth in quarterly revenue and profit in the recent December quarter results (YoY).

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What are penny stocks?

Penny stocks are shares of small companies that typically trade at low prices, often below ₹10 per share, in the Indian market.

These stocks are typically issued by companies with low market capitalisation and may have limited liquidity, meaning there are fewer buyers and sellers compared to larger, more established stocks. Penny stocks are considered speculative investments because they often lack the same level of financial reporting and scrutiny as larger companies.

While penny stocks have the potential for significant gains due to their low price, they also carry higher risks. They are more susceptible to price manipulation and fraud, and their prices can be highly volatile. Additionally, penny stocks may lack transparency and regulatory oversight, making it important for investors to conduct thorough research and exercise caution before investing in them.

Read here: Multibagger! This penny stock turned ₹10k to over ₹2 lakh in just 2 years

Investing in penny stocks can be appealing to some investors because of the potential for significant returns if the stock price increases substantially. However, it's essential to recognise that penny stocks also carry significant risks. Diligent research, thorough analysis, and effective risk management are essential when considering investments in penny stocks to navigate the inherent uncertainties and minimise potential losses.

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