Even as domestic benchmark indices witnessed a spike in volatility over the past six months, several low-priced stocks have managed to tide through these turbulent times and delivered unbelievable returns to investors. Digjam, a bankrupt textile company, is one such multibagger stock that has delivered huge returns to its shareholders over the last six months, as compared to 6% rise in both S&P BSE Sensex and NSE Nifty.
The Jamnagar-based SK Birla group-owned Digjam's shares have rallied as much as 1,350% during the last six months, with the stock price rising from ₹17.25 on October 18, 2021, to ₹250.45 intraday today. The stock has clocked 14 times growth during the period due to a slight improvement in financial performance as the company got back into the black.
If a person had invested ₹1 lakh in this textile stock on 18 October last year, it would be worth Rs ₹14.5 lakh at present.
However, before investing in this stock investors must do due diligence as the company is under a long-term additional surveillance measure (ASM) stage 1 category on the BSE. The exchange introduces ASM for companies to secure retail investors from extreme volatility in the stock price and excessive speculation.
Digjam, a manufacturer of fabrics for suiting and ready-to-wear clothing under its own brands, is currently under insolvency resolution process as it failed to pay its debt. It was dragged to the National Company Law Tribunal (NCLT) court by an operational creditor called Oman Inc for a claim worth ₹21.74 lakh in 2018.
As per the latest shareholding pattern available on the BSE, promoters do not hold any stake in the company at the end of the September quarter.
The strong surge in share price was in line with the financial performance of the company. For the second quarter ended September 2021, Digjam reported net profit of ₹7.46 crore against a loss of ₹2.76 crore during the corresponding quarter last year. Net sales rose multi-fold to ₹8.87 crore in Q2FY22, compared to ₹0.38 crore for the quarter ended September 2020.
For the financial year ended March 31, 2021, the company posted net profit of ₹8.94 crore against a loss of ₹17.58 crore in March 2020 fiscal. Net sales grew to ₹6.08 crore as compared to ₹0.81 crore sales registered for fiscal ended March 2020.
The company’s board is scheduled to meet on February 14 to consider and approve the financial results for the third quarter and nine months ended December 31, 2021.
On Monday, Digjam shares opened higher after two sessions of consecutive fall and gained as much as 3.4% to hit an intraday high of ₹250.45 on the BSE. The stock was trading higher than 50-day, 100-day and 200-day moving averages, but lower than 5-day and 20-day moving averages.
The stock has dropped 21.7% in the last one month and traded flat over the past one week. It has fallen 5% since the beginning of this year on a year-to-date basis. Digjam shares have gained 1,320% in the last one year and 1,000% over a five-year period.