Shares of a penny stock gained 16.7 percent on Wednesday’s intraday trades after the company received an order worth 40 percent of its market capitalization and after it allotted shares to a few non-promoters on a preferential basis.
Shah Metacorp Ltd is engaged in the business of manufacturing Stainless Steel and Mild Steel Long Products from scrap. Its shares were trading at 3.45 apiece at 03:11 PM on Wednesday and reached a 52-week high of ₹ 3.50 apiece on the National Stock Exchange (NSE).
The company recently received export orders of around US$ 5 million (approximately INR 40 Crore) from Italy and other European countries for the export of steel and alloys. Moreover, it received in-principle approval for a preferential issue from the Bombay Stock Exchange (BSE) as well as the National Stock Exchange (NSE).
Accordingly, the company’s board has approved the issue of 55 crore equity shares of ₹ 1 each to be issued at a price not less than ₹ 3.24 per share, which is at a premium of 8 percent as compared to yesterday’s closing price of ₹ 3.00, on a preferential basis to its non-promoters.
With a market capitalization of ₹ 100 crores, Shah Metacorp is a penny stock. It has a negative return on equity of 44.61 percent and a high debt-to-equity ratio of 3.83. Its shares were trading at a price-to-earnings ratio (P/E) of 37.50, which is higher than the industry P/E of 13.20, indicating that the stock might be undervalued as compared to its peers. Retail investors hold a 60.48 percent stake in the company, while promoters hold a 39.52 percent stake in it.
Please note that penny stocks are risky investments as they may lack sufficient liquidity and may be subject to pump-and-dump schemes. Investors should conduct thorough research or consult their investment advisors before investing in such stocks.
Written by Simran Bafna
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