Market speculation involves trading in financial instruments with the expectation of making significant returns, even if the high risk is involved.
The motive is to make use of market fluctuations for one’s advantage. This usually happens with securities where price movements are frequent and volatile.
Sensex and Nifty reached record highs in 2021 after many retail investors started investing in the stock market.
The year saw many IPOs, but 2022 started off on a cautious note as these indices were trading near the same levels that they started with.
The market has turned weak now, however, several stocks from the micro-cap and small-cap space have turned multibaggers since the start of this year. KIFS Financial Services is one such stock.
Till December 30, 2021, its share price was somewhere between ₹30 and ₹40 per share, but since December 31, 2021, it has been gaining 5% on each consecutive trading day. The share price has increased by more than 86% starting from December 31, 2021.
Though the markets fell, it reached an upper circuit band.
Reason
When the BSE sought clarification for this sharp rise, KIFS Financial Services replied:
The up and down movement of pricing at the stock exchange is nothing related to the information or decision was taken by the company. It seems purely speculation at market trading, which has nothing related to the company or its promoters.
As it is observed in this case, there aren’t any developments behind the sharp rally and there is nothing much in the company’s financials except increased sales and rise in cash flow that can explain this.
There is no definite reason for this rally, however, we may consider its performance in the December quarter to be a primary reason.
Financials
| (Standalone ₹m) | FY17 | FY18 | FY19 | FY20 | FY21 |
| Net sales | 84.9 | 60.5 | 59.0 | 156.0 | 210.4 |
| Sales Growth (%) | 19 | -29 | -3 | 164 | 35 |
| Net Profit | 33.5 | 30.0 | 28.2 | 39.4 | 37.9 |
| Profit Margin (%) | 40 | 50 | 48 | 25 | 18 |
| Free Cash Flow | 25.8 | 13.9 | 3.3 | 18.7 | 314.3 |
About the Company
KIFS Financial Services (KFSL) is a non-banking financial company that offers capital market products like margin trading, loans against shares and funds primary market issues for retail investors.
It’s part of the Khandwala group and a subsidiary of KIFS Commercial Private, a proprietary trading entity of the group.
Disclaimer – This article should not be taken as investment advice. Please do your own research before investing.
