In early trading on Monday, the metal stock surged to the upper circuit after the company received an order to supply Magnesium Powder.
Southern Magnesium and Chemicals Ltd shares hit the upper circuit of Rs 94.02 apiece, up 5 percent from the previous close price, with a market capitalization of Rs 28 crores.
According to the company’s exchange filing, Southern Magnesium and Chemicals has received an order for the supply of Magnesium Powder for an estimated contract value of Rs. 28.80 crores which is to be delivered within the next 12-15 months.
In the previous year, the company’s share price has risen from Rs 39 to current levels, giving multibagger returns of 141 percent. As a result, if an investor purchased 1 lakh shares of a company in the previous year, their holdings are now worth 2.41 lakhs!
Southern Magnesium and Chemicals Ltd revenue has increased by 260 percent year on year, proceeding from Rs 2.34 crore in FY 21-22 to Rs 8.57 crore in FY 22-23. During the same period, net profit climbed by 780 percent, from Rs 0.40 crore to Rs 3.53 crore.
The profitability ratios of Southern Magnesium and Chemicals Ltd have risen over time, with a return on equity ratio at 55.20 percent and a return on capital employed ratio at 74.15 percent, as well as a net profit margin of 41.18 percent and an operating margin of 57.11 percent.
As per the current shareholding pattern, the promoters own 53.36 percent of the company, while domestic institutional investors own 11.25 percent and retail investors own 35.38 percent,
Southern Magnesium and Chemicals Limited is engaged in the manufacturing of magnesium metal. The Company also produces magnesium chips, turnings, granules, and powders.
The company is classified as a penny stock. Individual investors must conduct extensive research before investing since high-return penny stocks have volatile performance, are rarely traded, and a small number of trades may result in a circuit limit.
Written by Omkar Chitnis
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