The calendar year 2021 belonged to smallcap stocks, with BSE Smallcap index delivering a stellar return of 62%, nearly equivalent to the combined gains of Sensex or BSE Largecap index (21%) and BSE Midcap index (38%). Several stocks from this category have outperformed their largecap and midcap peers, with analysts expecting the northward journey to continue in 2021.
One smallcap stock that has delivered a massive return to shareholders in 2021 is the textile manufacturer Adinath Textiles. The company, engaged in manufacturing of blended acrylic yarn and trading of unstiched suitings, shirtings and dress materials, saw its shares rallying nearly 5,000% in the last one year, outperforming its peers in terms of stock market returns during this period.
Ludhiana-based Adinath Textiles has returned 4,840% in the last one year, with its scrip jumping to ₹84.50 on December 31, 2021, from ₹1.7 on the same day last year, even as pandemic-led lockdown impacted business activities. Simply put, ₹1 lakh invested in this textile stock at the end of last year would have now turned into around ₹48 lakh at present.
From a 52-week low of ₹1.71 on December 31, 2020, to scaling a record high of ₹101.70 on September 29, 2021, Adinath Textiles had a surprise journey this year. This record rally is despite the company recording zero sales in the last six quarters.
In the calendar year 2021, Adinath Textiles share price zoomed 4,841%, while it surged 1,470% over the six-month period, and 67% in the last one month. The high-beta stock has witnessed a relentless rally for the last eight sessions and has risen 46.7% returns in the period. A high-beta stock is generally more volatile in nature and tends to move in either direction, compared to a benchmark.
On Friday, the stock opened with a gain of 4.97% and hit an upper circuit of ₹84.5. There was a surge in volume trade as 24,000 shares changed hands over the counter in first three hours of day’s trade, while market capitalisation rose to ₹57.58 crore.
The scrip was trading higher than 5-day, 20-day, 50-day, 100-day and 200-day moving averages, as per stock research platform Markets Mojo. The stock has witnessed an increase in investor participation, with delivery volume rising by 8.5% against 5-day average delivery volume.
According to the analyst platform, Adinath Textiles turned bullish from mildly bullish on December 1, 2021, at ₹53.05.
The rally in Adinath Textiles shares was not in line with its financial performance. For the second quarter ended September 30, 2021, the company recorded zero sales, while total income more than halved to ₹18.33 lakh. The company reported net loss of ₹14.74 lakh as compared to net profit of ₹3.56 lakh in the previous corresponding period. Besides, the company has not declared any dividend for the last many years.
For the financial year ended March 2021, the company reported a net profit of ₹31.55 lakh, as against net loss of ₹6.81 lakh during the previous year ended March 2020. There were no sales reported in FY21 as well as in the previous fiscal ended March 2020.