This Shapoorji Pallonji Group stock surged 315% in one year; do you own it?

For Forbes & Company, a subsidiary of Shapoorji Pallonji Group, the last calendar year 2021 has been nothing sort of a stellar journey. The engineering services provider has been able to generate strong returns over the last one year despite negative book value and weak long-term fundamentals. Shares of the debt-laden company surged 315% in the past one year, with its scrip jumping to ₹6,645 on January 11, 2021, from ₹1,600 on the same day last year, even as pandemic-led lockdown impacted business activities.

An amount of ₹10 lakh invested in this engineering equipment manufacturing stock at the beginning of this year would have now turned into around ₹41.5 lakh at present.

However, investors must do due diligence before investing in this stock as it has been placed under long term additional surveillance measure (ASM) stage 4 category on the BSE. The exchange introduces ASM for companies to secure retail investors from extreme volatility in the stock price and excessive speculation.

With a market capitalisation of ₹8,536.30 crore, the midcap stock has delivered decent returns on a long-term basis. The stock has risen nearly 200% in three years and 246% during the last five years. It has gained 147% in the last six months and 3% over one month.

Forbes & Company shares have been gaining for the last four days and climbed 7.77% in this period. On Tuesday, the stock opened lower at ₹6,515 against the previous close price of ₹6,621.75. During the day’s trade so far, the stock declined as much as 1.6% to hit an intraday low of ₹6,515. The share currently trades nearly 2% lower than its 52-week high of ₹6,774.

Forbes & Co shares were currently trading higher than 5-day, 20-day, 50-day, 100-day, and 200-day moving averages. On the volume front, the stock witnessed a spurt in investor participation with delivery volume rising by 54.85% against 5-day average volume, as per stock research platform Markets Mojo.

Stock surged despite weak earnings

The financial performance of the company was not in line with the stellar rise in the stock of the firm. The financial year 2020-21 and the first half of the current fiscal had been quite tough for the Shapoorji Pallonji Group company as it faced challenges due to the restricted movement, and disrupted supply lines during the pandemic.

For the financial year ended March 31, 2021, Forbes & Company reported a net loss of ₹31.02 crore compared to loss of ₹24.55 crore in the previous fiscal. However, the total income nearly tripled to ₹575.73 crore as against ₹202.41 crore in the prior year.

The first half of the current fiscal (H1 FY22) was also difficult for the company, with net loss widening to ₹78.44 crore, from a loss of ₹31.45 crore reported in the same period last year. The total income grew by 73% to ₹121.78 crore compared to ₹70.30 crore in H1 FY21.

For the quarter ended September 30, 2021, Forbes & Company posted a net loss of ₹68.02 crore as against total revenue of ₹66.36 crore. Net sales rose by 33% to ₹62.02 crore in Q2 FY22, from ₹46.63 crore in the corresponding period last year.

About the company

Forbes & Company Ltd (FCL), the erstwhile Forbes Gokak, is the oldest registered company in India, operating a diversified portfolio including engineering, industrial automation, consumer durables (water and air products), chemical tankers and real estate. The Mumbai-based company is the subsidiary of Shapoorji Pallonji’s flagship company Shapoorji Pallonji and Company Private Limited (SPCPL), the holding-cum-operating company of the SP group.

It currently operates under two divisions engineering and real estate with major business verticals under three entities- Eureka Forbes Limited (EFL) and its subsidiaries, Shapoorji Pallonji Forbes Shipping Limited (SPFSL), and Forbes Technosys Limited (FTL).

Shareholding pattern

As per the latest shareholding pattern available on the BSE, Shapoorji Pallonji (SP) group owns a majority stake of 72.56% in the company, while 1.29% of shares are held by Forbes Campbell Finance, a subsidiary of the company.

Meanwhile, foreign portfolio investors hold 11.52% shares in the company, while the rest is owned by individual shareholders.