High ROE & high ROCE multibagger penny stock under Rs 40 & FIIs increase stake: Board announced bonus shares; PAT zooms over 180 per cent!

The stock gave multibagger returns of 460 per cent in just 2 years and a whopping 1,700 per cent in 3 years.

The Indian stock markets were in the green on Wednesday, with the BSE Sensex Index closing 1.1 per cent higher at 66,902 and the NSE Nifty-50 Index up by 1.04 per cent at 20,097.

Along with the market in green, one particular penny stock, Axita Cotton Ltd, bucked the trend and traded higher. The stock was up by 1.93 per cent to Rs 31.21 per share and has been a multibagger in the past. The shares of the company saw a spurt in volume by 2.82 times on BSE.

The company recommended the issuance of bonus equity shares in the ratio of 1:3 [i.e., 1 bonus equity share of Rs 1 each for every 3 fully paid-up equity shares held as on record date subject to the approval of shareholder. The company did not fix the record date for the bonus issue of shares.

Additionally, the company has secured a new sales order from multiple vendors in the industry. The company has received various contracts/awards for supplying cotton bales worth Rs 89.22 crore (including &5T) in Indian Raw Cotton categories under the terms of the agreement, Axita Cotton Limited will deliver cotton bales over a period of time.

Order No. 1 was worth Rs 26.60 crore from A B & Co.

Order No. 2 was worth Rs 18.72 crore from HSC Commodities Private Limited.

Order No. 3 was worth Rs 21.77 crore from P D Commodities.

Order No. 4 was worth Rs 22.13 crore from Shree Shiddhnath Cottex Pvt Ltd.

Earlier, the company had declared an interim dividend of Rs 0.10 per equity share (representing 10 per cent) of a face value of Rs 1 each fully paid up for the financial year 2023-24. The dividend was ex-traded on November 17, 2023.

According to the Quarterly Results, the net sales increased by 324.23 per cent to Rs 388.78 crore and the net profit skyrocketed by 184.07 per cent to Rs 6.51 crore in Q2FY24 compared to Q2FY23. According to the half-yearly results, the net sales increased by 108.13 per cent to Rs 616.64 crore and the net profit increased by 81.74 per cent to Rs 12.26 crore in H1FY24 compared to H1FY23. In its annual results, the net sales decreased by 32.42 per cent to Rs 552.6 crore and net profit increased by 11 per cent to Rs 17.04 crore in FY23 over FY22.

Axita Cotton Limited is engaged in the business of manufacturing, processing and finishing cotton bales and cotton seeds. The company's main business is the ginning and pressing of seed cotton (Kapas) on a work basis and the production of cotton bales and cotton seeds. The company has a market cap of over Rs 600 crore.

The stock has an ROE of 38.4 per cent and an ROCE of 49.1 per cent. As of September 2023, FIIs bought 37,19,299 shares or 1.89 per cent stake in this company (Currently, FIIs own a total of 5.32 per cent stake).

The stock gave multibagger returns of 460 per cent in just 2 years and a whopping 1,700 per cent in 3 years. Investors should keep an eye on this Small-Cap stock.

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