Indian stock market has witnessed a surge in retail participation since the Covid-19 outbreak as more and more first-time investors are investing in equities for better returns. The onset of the pandemic and subsequent work-from-home mandates led to higher savings and further boosted their enthusiasm. The spurt in investment in penny stocks is indicative of a rise in investor confidence amid optimism about the fundamental risk and return on investments.
Despite the high risk, investors are betting high on penny stocks — shares with low price and low market capitalisation — to generate maximum returns. These stocks have the potential to give massive returns in a short time but the risk is equally high. The rally in such shares is generally not based on fundamentals but mostly based on speculations.
One such penny stock that has managed to deliver enormous returns to investors in the last year is Flomic Global Logistics, a warehousing, and freight service provider. The stock of the company has zoomed from around ₹3.15 on February 18, 2021, to around ₹140 currently, giving a skyrocketing return of 4,470% to its investors in just one year. In comparison, the benchmark index BSE Sensex has risen 13% during the period.
Investment of ₹1 lakh in this logistics stock at ₹3.15 apiece in February last year would have now turned into around ₹46 lakh.
Flomic Global Logistics is a global player in the multi-cargo and multi-surface logistics business with an operational presence in Dubai and offices at every important port and business hub in India. It provides multiple services to its clients in the form of air freight forwarding, sea freight forwarding, custom broking, consolidation, cross trade and project cargo handling, supply chain (warehousing), transportation, domestic trade by land and air, and event and exhibition logistics.
How Flomic Global Logistics shares fared so far
The company, which handles transportation assignments of all types of commodities across the globe, saw its shares zooming more than 40,000% in nearly 3 years, from ₹0.35 on March 28, 2019, to ₹140 intraday today on the Bombay Stock Exchange (BSE). With a market capitalsation of ₹100.6 crore, the microcap stock has jumped 400% in the past six months.
However, the stock seemed to have lost momentum in the last few months. It has given a negative return of 23% since the beginning of the calendar year 2022 and has fallen over 10% in the past one month.
On Friday, the stock witnessed choppy trade as it swung between gains and losses. It rose as much as 2.5% to hit a high of ₹148, while it slipped 2.3% to touch a low of ₹141 on the BSE. The stock was trading higher than 200-day moving averages, but lower than 5-day, 20-day, 50-day, and 100-day averages.
Posts solid earnings in December quarter
Flomic Global Logistics has posted net profit of ₹3.38 crore for the quarter ended December 31, 2021, as against ₹1.67 crore in the year-ago period and ₹0.70 crore in September quarter of 2021. The total income more than doubled to ₹110.76 crore in Q3FY22, as compared to ₹48.29 crore in the corresponding quarter of the last fiscal. It had reported a total income of ₹80.89 crore during the period ended September 30, 2021.
For the nine-month period ended December 2021, the net profit stood at ₹4.88 crore as against ₹3.39 crore in the same period last year. Revenue jumped more than two-fold to ₹247.60 crore, from ₹112.12 crore during the 9-month period ended December 31, 2020.
For the full financial year 2020-21, the company reported net profit of ₹2.47 crore against a loss of ₹0.05 crore in the fiscal ended 2020. Sales increased to ₹165.02 crore as compared to ₹114 crore in FY20.