Penny stock to multibagger: Popees Cares zoom 8,861% in 4 years, from ₹1.8 to ₹161.3

Popees Cares has transformed from a once-overlooked penny stock into a remarkable success story, delivering extraordinary returns for investors over both the long and short term. This transformation underscores the potential of penny stocks to generate significant value for those willing to embrace the associated risks.

Over the past four years, Popees' stock price has surged an incredible 8,861 percent, climbing from ₹1.8 in August 2020 to its current value of ₹161.30. This astonishing growth not only highlights the stock's consistent value appreciation but also cements its position as a lucrative investment opportunity within the penny stock segment.

In August 2021, Popees was trading at ₹2.5, and since then, it has soared by 6,352 percent. This sustained growth over an extended period showcases the company's ability to generate substantial returns for its investors.

Even in the short term, Popees Cares has maintained its impressive performance. Over the past year, the stock has surged by 1,634 percent. In 2024 year-to-date, the stock has gained over 181 percent, despite encountering losses in two out of eight months.

August was a particularly strong month for the stock, with a nearly 22 percent surge, building on a 35 percent gain in July. Despite shedding over 22 percent in June, the stock rallied 20.7 percent in May and 6.7 percent in April, following a 27 percent drop in March. Earlier in the year, February saw a significant rally of over 51 percent, which followed a massive 54 percent surge in January.

The stock recently reached an all-time high of ₹161.30 on August 14, 2024, marking a 1,601 percent increase from its 52-week low of ₹9.48, recorded on August 16, 2023. This remarkable performance underscores Popees Cares' ability to deliver substantial returns and maintain investor confidence despite market volatility.

Despite its exceptional performance, it's essential to highlight that the stock is currently 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. It aims to enhance monitoring and surveillance of listed companies to ensure investor protection and market integrity.

Under Stage I, the trading of the securities is settled through a trade-for-trade mechanism with a price band of 5 percent, or 2 percent.

Under Stage II, the surveillance action permits trading on all trading days under periodic call auctions with trade-for-trade settlement and a 2 percent price band. Earlier this stage permitted trading just once a week.

About the Firm

Popees Cares Limited, an Indian company specializing in baby care products, offers a diverse range of items under several categories. These include infant fashion such as dungarees, shirts, shorts, sleep suits, party wear, t-shirts, and pants. The company also provides a variety of baby care products like fabric wash, wipes, shampoo, body wash, bathing bars, glycerin soaps, diapers, and herbal powders, along with newborn jhablas.

In addition to these, Popees Cares caters to kids' fashion with items like casual dresses, bloomers, unisex cotton crossover jhablas, baby boy dungarees, printed t-shirts, and girls' tops and skirts. The company also offers accessories, gifting essentials, and ride-ons. Their products are available both in physical stores and online.

The company, originally known as Archana Software Limited, rebranded as Popees Cares Limited in April 2024. Founded in 1994, Popees Cares Limited is headquartered in Kozhikode, India.

The Board of the company also recently approved the proposal of raising of funds through Rights Issue of Equity Shares for the sum not exceeding ₹50 crore, subject to requisite approvals from the statutory, regulatory and other authorities as applicable.

Earnings

In the June quarter (Q1FY25), Popees Cares reported a net loss of ₹5.1 crore, which was the same as in the period last year. Meanwhile, The company did not declare its total revenue for the quarter under review. It was ₹1 lakh in the year-ago period.

Brokerage Views

ICICI Direct has expressed a positive outlook on Popees Cares, highlighting its strong momentum as a key factor for optimism. The stock has consistently traded above its short, medium, and long-term moving averages, reflecting robust performance. The company has effectively utilized its capital to drive profitability, with its Return on Capital Employed (RoCe) improving over the past two years, reinforcing its appeal as an investment opportunity. Additionally, the stock recently achieved a new 52-week high.

However, the brokerage also notes several weaknesses:

- Degrowth in Revenue and Profit: The company has experienced a decline in both revenue and profit.

- Low Piotroski Score: Popees Cares has a low Piotroski score, indicating weak financial health.

- Declining Net Cash Flow: The firm is struggling to generate positive net cash flow.

Investing in penny stocks like Popees Cares can be attractive due to their potential for high returns with relatively low initial investment. However, this segment is fraught with risks.

To navigate the high-risk environment of penny stocks, investors should conduct thorough research and apply strong risk management practices. Understanding the company's fundamentals, evaluating its market position, and examining its financial health are crucial. A disciplined investment approach and setting realistic expectations can help manage potential losses and capitalize on opportunities while safeguarding investments from undue risks.

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