The shares of Elegant Floriculture and Agrotech India Ltd surged 1028.23% from ₹5.42 apiece on January 3, 2022, to ₹61.15, its 52-week high in April 2022.
It was observed that the scrip would hit the upper circuit on every trading session, starting from mid-March to 8th April 2022. This made multibagger returns for investors. For example, those investors who had invested ₹ 1,00,000 in the shares in January, had holdings worth ₹ 11.28 lakhs.
Elegant Flori and Agrotech India Ltd is a wholesaler of flowers and plants. It is primarily an exporter of roses and other flowers, mainly to Japan and other European countries. The company provides fertilizers and pesticides as well.
After 8th April, the share price of the company started to decline. It has been touching the lower circuit since 11 April 2022. The stock price as of 22 April is ₹38.90
The company has a market capitalization of ₹ 106 crores. It has a Return of Equity (ROE) of -2.14% and a return on capital employed of -0.16%. Its promoters hold a very low stake of 7.55% in the company. Its net sales and net profits have been declining for the past three years. Its profits have shown an increasing trend since the last three quarters.
With this example, we aim to provide our readers with information about what could happen when they invest in companies without doing thorough research. It is important to be cautious, especially while investing in penny stocks. Retail investors are advised to not invest in such stock as they can prove to be a Pump and Dump scheme.
A lot of investors, unknowingly or driven by greed, fall for these tips. They jump in when they see a stock hitting upper circuits, but are stuck once the operators dump the stock. In pretty much all the cases, these stocks end up crashing 90%+ and become worthless.
Disclaimer
The content in this news article is not investment advice. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Dailyraven Technologies or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
