Shooting up! Multibagger penny stock Lorenzini Apparels soars 6,431% in 4 years

Multibagger penny stock Lorenzini Apparels has delivered outstanding returns for long-term investors, showcasing phenomenal performance. Over the last four years, its stock price has skyrocketed by an astounding 6,431 percent, surging from ₹0.38 in July 2020 to ₹24.82 presently. This exceptional growth highlights Lorenzini's consistent value appreciation, making it a standout in the penny stock segment and cementing its reputation as a highly lucrative investment opportunity.

Moreover, in the past three years alone, the stock has surged impressively by 5,415 percent, climbing from ₹0.45 in July 2021.

Recent performances have further underscored Lorenzini's stellar track record, with gains of 91 percent over the past year and a remarkable 60 percent year-to-date in 2024.

The stock has shown a strong performance this year despite gains in just 3 out of the 7 months. July alone saw a robust increase of over 11 percent, snapping 4 straight months of losses. The stock shed 8 percent in June, 2 percent in May, 7 percent in April and 10.4 percent in March. Prior to that, February marked a significant rally of 19 percent after another massive 63 percent surge in January.

The stock is currently 25 percent away from its record high of ₹33.02, hit on February 23, 2024. Meanwhile, it has soared 124 percent from its 52-week low of ₹11.09, hit on July 17, 2023.

About the firm

Lorenzini Apparels Limited designs, manufactures, and markets ready-made garments in India. It offers formal, semi-formal, and casual wear for men and women under the Monteil brand name. The company serves customers through retail outlets and e-commerce channels. Lorenzini Apparels Limited was incorporated in 2007 and is based in New Delhi, India.

Earnings

In the March quarter (Q4FY24), Lorenzini reported a standalone net profit of ₹27.37 lakh surging multifold, 282 percent, from ₹7.17 lakh in the same period last year. However, in the previous quarter (December 2023) the company posted a loss of ₹52 lakh.

Revenue for the quarter stood at ₹554.6 lakh, a jump from ₹263 lakh a year earlier and ₹277.6 lakh in the December quarter.

For the fiscal year 2023-24, the company achieved a consolidated net loss of ₹324 lakh, a substantial decline from a net profit of ₹455 lakh in FY23. Revenue for FY24 also fell to ₹905.67 lakh as compared to ₹1,427 lakh in the previous financial year.

Brokerage Views

ICICI Direct highlights that Lorenzini has been effectively using its capital to generate profit, with its Return on Capital Employed (RoCE) improving over the last two years. Additionally, the company has been efficiently utilizing shareholders' funds, as evidenced by an increasing Return on Equity (ROE) in the same period. Furthermore, Lorenzini has demonstrated efficiency in managing its assets to generate profits, with its Return on Assets (ROA) also showing improvement over the past two years.

Meanwhile, its weaknesses, as per the brokerage, were:

- Degrowth in quarterly revenue and profit in recent results(YoY).

- Declining revenue every quarter for the past 2 quarters

- Fall in quarterly revenue and net profit (YoY).

Investing in penny stocks presents the opportunity for substantial returns due to their low price points, but it also comes with significant risks. Penny stocks often face liquidity issues, leading to lower trading volumes compared to larger companies. Additionally, they may be subject to less stringent financial reporting requirements and oversight, increasing the risk of market manipulation and fraudulent activities.

These factors contribute to heightened volatility in penny stocks, raising the risk for investors. To navigate these challenges effectively, thorough research and robust risk management strategies are essential. By taking these precautions, investors can better manage the uncertainties associated with penny stocks and protect themselves against potential losses.

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