Low PE high ROE multibagger penny stock below Rs 5: This micro-cap NBFC company submits expression of interest for acquisition of Asset Reconstruction Company!

The stock gave multibagger returns of 780 per cent in just 3 years whereas the BSE Sensex Index is up by 55 per cent.

Advik Capital Limited, as a part of its business expansion strategy and with the objective of broad-basing the portfolio, and diversifying into futuristic new edge businesses, complimenting and supplementing the existing business lines of the Company, have submitted Expression of Interest for acquisition of ARC (Asset Reconstruction Company) registered with the Reserve Bank of India to carry on the Business of Securitisation or Assets Reconstruction under SARFAESI Act.

Asset Reconstruction Companies (ARCs) are specialized entities established in 2002 to address Non-Performing Assets (NPAs) in India's financial sector. With a focus on MSMEs, a new ARC backed by public sector banks aims to unlock illiquid NPAs through innovative resolution mechanisms, facilitating smoother credit flow to MSMEs.

ARCs resolve NPAs through various methods, including recovery, restructuring, and management changes. Industry estimates suggest 40 per cent of NPA cases are resolved through one-time settlements, 40 per cent through restructuring, and 20 per cent through enforcement measures. ARCs play a crucial role in liberating capital and management bandwidth for banks.

The Assets under Management (AUM) of ARCs are projected to grow 9.8 per cent to Rs 1.19 lakh crore this fiscal year, driven by a few large transactions. In FY22, the AUM stood at Rs 1.09 lakh crore.

Advik Capital Limited, through this strategic acquisition, is strategically positioning itself to capitalize on the emerging opportunity of private corporate debt being serviced by ARCs, in addition to their conventional business lines. This move is anticipated to provide a significant boost to their ARC operations.

Advik Capital Ltd is in the business of financing, inter-corporate investments and capital market activities. The company has a market cap of Rs 106 crore and has delivered good profit growth of 145 per cent CAGR over the last 5 years. The company reported positive numbers in its Quarterly Results (Q1FY24) and annual results (FY23).

On Tuesday, shares of Advik Capital Ltd surged 1.23 per cent to Rs 2.47 per share with an intraday high of Rs 2.50 and an intraday low of Rs 2.37. The stock’s 52-week high is Rs 5.01 and its 52-week low is Rs 1.90. The shares of the company have a PE of 11.5x whereas the industry PE is 24x and an ROE of 28 per cent.

The stock gave multibagger returns of 780 per cent in just 3 years whereas the BSE Sensex Index is up by 55 per cent. Investors should keep an eye on this micro-cap stock.

Disclaimer: The article is for informational purposes only and not investment advice.