Multibagger penny stock: Paramount Communications has made headlines as a standout multibagger penny stock on Dalal Street. Once trading at sub- ₹10 levels, the stock has transformed into a valuable asset, delivering remarkable returns to its investors. Paramount’s meteoric rise serves as a testament to the high reward potential of penny stocks, though it also underscores the inherent risks associated with such investments. The company’s performance is a case in point for investors intrigued by the potential of penny stocks to generate outsized gains in the long run.
In just four years, Paramount Communications' stock price surged by an astounding 864 per cent. From around ₹7 in October 2020, the stock has shot up to ₹67.95 (as of the previous close), showcasing a dramatic appreciation in value. Over the past three years alone, the stock gained over 493 per cent, further cementing its reputation as a high-yield investment. This transformation highlights the company's resilience and growth trajectory within the smallcap segment of the stock market.
While Paramount has shown remarkable long-term growth, it has experienced short-term volatility as well. The stock has consolidated in 2024 so far after recording a 20 per cent jump in the past year. The stock has advanced in five months of 2024 and declined an equal number of times, reflecting a mix of growth spurts and corrections typical to smallcap stocks.
Paramount Communications reached a record high in December 2023, marking a significant milestone in its trading history. Despite the volatility, the stock has maintained upward momentum, currently positioned about 42 per cent below its peak of ₹116.70, hit in December 2023, yet up 25 per cent from its 52-week low of ₹54.36, recorded in October 2023.
In the September quarter (Q2FY25), Paramount Communications witnessed a 4.31 per cent rise in net profit to ₹20.33 crore as against ₹19.49 crore in Q2FY24. The company’s sales for the quarter ended September 2024 surged by 40.98 per cent, hitting ₹355.89 crore, up from ₹252.44 crore in the same quarter of the previous year.
During this period, Paramount issued 6,23,25,925 equity warrants to non-promoters and other entities for the unutilised portion of quarterly proceeds. As of the end of the last quarter, 6,01,25,925 options had been exercised, resulting in the conversion of equity share warrants into an equal number of equity shares. According to SEBI guidelines, the initial application fee of ₹5.40 per warrant—25 per cent of the issue price of ₹21.57 per warrant, amounting to ₹118.80 lakh—was forfeited upon warrant maturity. Additionally, 22,00,000 equity warrants, for which 75 per cent of the amount ( ₹16.17 per warrant) was not paid, were cancelled.
Paramount Communications, founded by Shyam Sunder Aggarwal in 1978, is an Indian wire and cable manufacturer, producing a diverse range of cables, including those for power, telecom, railways, and speciality applications. Paramount exports its products globally to markets such as Australia, Bangladesh, Chile, Ghana, Libya, Myanmar, Nigeria, Tanzania, the UAE, the UK, the US, and Zambia. The company operates manufacturing facilities in Khushkhera, Rajasthan, and Dharuhera, Haryana.
For investors, Paramount’s journey offers valuable insights into both the potential and the pitfalls of investing in penny stocks.
Penny stocks appeal to investors with the potential for substantial returns from a relatively small investment. However, these high-reward prospects carry notable risks. Managing the volatility of penny stocks requires careful research and a solid risk management approach. Investors are advised to delve into the company’s fundamentals, evaluate its financial stability, and understand its market position. Such diligence can help investors make more informed choices and reduce potential losses while seeking gains within this high-risk segment.
Disclaimer: This story is for educational purposes only. Please speak to an investment advisor before making any investment decisions.
