Penny stock turns multibagger in five years, soars over 6,500%

Once a penny stock, Lorenzini Apparels has emerged as a remarkable success story on Dalal Street. The stock has transformed from a penny stock to a multibagger, delivering impressive returns to investors. Its performance highlights the potential for penny stocks to generate significant value, although it also underscores the associated risks involved in such investments.

It has witnessed exceptional gains in the last five years. The stock has soared 6,518 per cent in this period, rallying from Re 0.39 in November 2019 to the current price of ₹25.81. This strong growth highlights the stock's steady value increase, positioning it as a standout performer among penny stocks.

Meanwhile, in the last three years, it has skyrocketed 5,391 per cent from Re 0.47 in November 2021.

In the short term as well Lorenzini Apparels' stock performance has been decent. Over the past year, the penny stock has advanced over 38 per cent, and in 2024 so far, it has climbed 66 per cent. Overall, the stock has delivered positive returns in five of the 11 months so far.

The stock hit its 5 per cent upper circuit of ₹25.81 in intra-day deals today after strong Q2 results. However, it pared gains to fall around 8 per cent from its day's high to ₹23.80 per share.

The multibagger stock reached a record high of ₹35.90 in September 2024. From today's high, it is 28 per cent off its peak but is still up 7.7 per cent from its 52-week low of ₹14.57, recorded in December 2023.

This upward trajectory demonstrates the lucrative potential for investors willing to take on the risks associated with penny stocks.

Earnings Snapshot

In the September quarter, the company posted a multi-fold increase in its net profit to ₹12.2 crore as against ₹1.86 crore in the same period last year. Meanwhile, its total income also increased over 51 per cent to ₹28 crore in the quarter under review versus ₹18.5 crore in the year-ago period.

For the first half of the financial year 2024-25 (H1FY25), the company's net profit increased to ₹14 crore, skyrocketing from ₹2.6 crore in H1FY24. Its total income also rose 38 per cent to ₹45.24 crore in H1FY25 from ₹32.74 crore in the same period last year.

Established in 2007, Lorenzini Apparels Ltd is a prominent player in the Indian apparel industry. It designs, manufactures, and markets ready-made garments under its well-known "Monteil" brand. The company offers a diverse range of formal, semi-formal, and casual wear for both men and women, sold through exclusive stores, online platforms, and third-party contractors.

Penny stocks offer the potential for substantial returns on a small investment, making them attractive to investors. However, this high-reward opportunity carries significant risks. To navigate the volatility associated with penny stocks, it is crucial to conduct thorough research and apply robust risk management strategies. Investors should scrutinise a company's fundamentals, evaluate its financial health, and assess its market position. By doing so, they can make more informed decisions, reduce the risk of potential losses, and better capitalize on opportunities in this high-risk segment of the market.

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