Shares of a penny stock listed on the BSE opened 5 percent higher and continued to remain locked in an upper circuit at ₹ 11.55 apiece after the company’s board approved the raising of funds.
GI Engineering Solutions’ board of directors considered and approved the raising of funds to augment the long-term financial resources of the company through raising of funds by allotting five crore convertible warrants having a face value of ₹ 10 per warrant on a preferential basis at an issue price of ₹ 15 per warrant, subject to regulatory approvals. The amount aggregates to ₹ 75 crores.
GI Engineering Solutions provides information technology, engineering services and other related services. The company’s segments include dealing in shares/ securities, engineering-based services and trading division infrastructure.
The company’s share price increased by 147.85 percent in the past year and delivered multibagger returns. However, it has declined by 63.45 percent since it made a high of ₹ 33.15 apiece in May this year, destroying investor wealth.
While penny stocks have the potential to make massive returns, they are prone to pump-and-dump schemes. Investors should consult their investment advisors or research these stocks comprehensively in order to avoid losses.
With a market capitalization of ₹ 95 crores and a share price of ₹ 11.55, GI Engineering is a penny stock. It has a low return on equity of 14.85 percent and an ideal debt-to-equity ratio of 0.03. Its shares were trading at a price-to-earnings ratio (P/E) of 8.23, which is higher than the industry P/E of 7.80, indicating that the stock might be overvalued as compared to its peers.
Retail investors hold a 58.82 percent stake in the company followed by promoters with 40.89 percent, and foreign institutions with 0.29 percent.
Written by Simran Bafna
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