Surana Telecom and Power: Former penny stock turns multibagger, soars 796% in 4 years

Surana Telecom and Power, previously a penny stock, has delivered exceptional returns for long-term investors. Over the past four years, its stock price has surged by an impressive 796 percent, climbing from ₹2.95 in June 2020 to around ₹26.45. This remarkable growth highlights Surana's consistent value appreciation, making it a standout performer in the penny stock category and showcasing its potential as a high-return investment opportunity.

Meanwhile, over the past 5 years, the stock has surged by an impressive 494 percent, rising from ₹4.05 in June 2019. Similarly, over the last 3 years, it has shown significant growth of 259 percent, starting from ₹6.70 in June 2021.

In recent times as well, Surana Telecom And Power has demonstrated strong performance, gaining 172 percent over the past year and 56 percent year-to-date in 2024. The stock has delivered positive returns in 4 out of the 6 months so far this year. In June, it jumped almost 35 percent following a rise of 18 percent in May and 2 percent in April. Prior to that, it declined 18 percent in March and 5.5 percent in February. January 2024 saw a notable increase of 23 percent in the stock's value.

Surana Telecom And Power hit its record high of ₹26.57. However, it has shown strong resilience by surging 206 percent from its 52-week low of ₹8.68, recorded on July 14, 2023.

About the firm

Surana Telecom and Power Limited engages in the generation and sale of solar and wind energy, and trading of solar modules in India. The company operates a solar power generation plant with an installed capacity of 20 MW and a wind power generation plant with an installed capacity of 1.25 MW. It also manufactures jelly-filled telephone cables, optical fiber cables, CDMA mobile handsets, fixed wireless telephones, power cables, automated silicon wafers, and solar photovoltaic modules. The company was formerly known as Surana Telecom Ltd and changed its name to Surana Telecom and Power Limited in October 2007. The company was incorporated in 1989 and is based in Hyderabad, India.

Earnings

In the March quarter (Q4FY24), the firm turned profitable with a net profit of ₹5.23 crore versus a loss of ₹1.24 crore in the same quarter last year. However, it grew multifold on a sequential basis, rising 549 percent from ₹0.8 crore in the December quarter.

Meanwhile, its total income also doubled YoY to ₹10.68 crore in the quarter under review as against ₹5.33 crore in the same quarter last year. Meanwhile, in the previous quarter, its total income was ₹4.27 crore.

Overall for the financial year FY24, the company's net profit came in at ₹7.42 crore mildly higher from ₹7.36 crore in FY23. Its total income, however, fell to ₹23.82 crore in FY24 from ₹26.94 crore in FY23.

Brokerage view

Domestic brokerage house ICICIDirect has highlighted some key strengths of Surana Telecom, noting its strong momentum with the stock price above short, medium, and long-term moving averages. The company reached a new 52-week high today and has been consistently improving its net profit margins both on a quarterly and trailing twelve-month basis. These factors collectively suggest a robust operational performance and investor confidence in the company's growth prospects.

Meanwhile, its weaknesses, as per the brokerage, are:

- Negative Breakdown First Support (LTP < S1)

- Declining Net Cash Flow: The company is not able to generate net cash

Investing in penny stocks can offer significant gains due to their lower prices, but they also come with considerable risks. These stocks often suffer from liquidity issues, resulting in lower trading volumes compared to larger companies. Furthermore, they may lack stringent financial reporting standards and oversight, making them more susceptible to market manipulation and fraud.

These factors contribute to higher volatility in such stocks, increasing the risks for investors. To manage these risks effectively, thorough research and strong risk management strategies are crucial. By implementing these measures, investors can better navigate the uncertainties associated with small-cap stocks and protect against potential losses.

Disclaimer: This story is for educational purposes only. Please speak to an investment advisor before making any investment decisions.