K&R Rail Engineering Ltd stock started its trading session today at Rs 415 and closed at a price of Rs 412.25. The scrip showed an upside of around 1.5 percent as compared to the previous closing price of Rs 406.80. The stock used to be a penny stock a year back trading at price levels of Rs 20.50. 

Keeping a purview of one year, the stock provided multibagger returns of a whopping 1,910 percent which means that if someone would have invested Rs 1,00,000 in the stock then it would have converted to Rs 20,10,000 within a period of one year. 

K&R Rail Engineering Ltd, founded in 1983, is engaged in the business of laying private Railway Sidings on a turnkey basis. It offers services in laying of track, signaling, electrification, and telecommunication in the Railway Industry. 

Going through the financials of the company, the revenues and net profits show an improving scenario with a rise in numbers. Revenues moved from Rs 32 crores in Q2 to Rs 59 crores in Q3. Moreover, the net profit figures showed a shift from Rs 0.53 crores in Q2 to Rs 1.66 crores in Q3. 

In congruence with the pattern shown by the above metrics, the profitability ratios of the company showed an upward trend on a YoY basis. The ROE figures shifted from 13.23 percent in FY20-21 to 16.24 percent in FY21-22. Likewise, the ROCE figures moved from 14.51 percent in FY20-21 to 15.89 percent in FY21-22. Return on Asset (ROA) has seen improvement over the past four financial years with the most recent movement from 4.51 percent in FY20-21 to 6.18 percent in FY21-22. 

Something of a concern is the debt to equity ratio of the company increasing from 0.13 in FY20-21 to 0.24 in FY21-22. 

Investments in Penny stocks are advised to be done with prior evaluation of financials. Please consult your advisor before investing. 

Written by Amit Madnani

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