Low PE high ROE multibagger penny stock below Rs 5: This micro-cap NBFC company firmed up its plan to apply for a licence for Alternative Investment Fund Category – II

The stock gave multibagger returns of over 800 per cent in just 3 years whereas the BSE Sensex Index is up by 55 per cent.

Advik Capital Limited, an RBI-registered non-banking finance company (NBFC), plans to establish an Alternative Investment Fund (AIF) under Category II. The company aims to raise Rs 250 crore for the AIF and will invest 10 per cent of the corpus as the sponsor. This initiative is part of Advik Capital's business expansion strategy to diversify into new-age businesses and complement its existing business lines.

The AIF will invest in sunrise sectors, including healthcare, infrastructure, and manufacturing, through equity, quasi-equity, or structured debt. In the second phase, the company plans to invest in operational but stressed assets that can be revived with strategic interventions and financial support. Advik Capital will leverage its experience in the equity capital markets and strategically position the fund within the performing credit space. The company has appointed intermediaries, merchant bankers, and legal consultants to formalize strategies, prepare documentation, and submit the application to SEBI for approval.

Advik Capital is also in the final stages of recruiting a Chief Investment Officer and an investment management team for efficient execution. This strategic decision will strengthen Advik Capital's position in the financial market by offering more structured products to its customers. The Indian AIF industry has witnessed a 7-fold growth in the past five years, with Rs 69.4 lakh crore of commitments raised as of June 30, 2022. Out of this, Rs 56.19 lakh crore of commitments were raised in Category II AIF, and Rs 22.04 lakh crore of investments have been completed. There are approximately 900 AIFs registered with SEBI.

Earlier, the company is expanding its business by acquiring an asset reconstruction company (ARC). ARCs specialize in resolving bad loans, and Advik Capital believes this acquisition will strengthen its position in the growing ARC market. ARCs play a crucial role in the financial sector by addressing bad loans and freeing up capital for banks. The ARC market is projected to expand in the coming years due to the rising number of bad loans in India.

Advik Capital's acquisition of an ARC is a strategic move that will leverage its expertise in financing and capital market activities to resolve bad loans and generate profits. This acquisition is expected to create synergies with Advik Capital's existing businesses and generate significant value for its shareholders.

The company has a market cap of Rs 123.31 crore and has delivered good profit growth of 148 per cent CAGR over the last 5 years. The company reported positive numbers in its Quarterly Results (Q2FY24) and annual results (FY23).

Today, shares of Advik Capital Ltd surged 0.69 per cent to Rs 2.90 per share with an intraday high of Rs 2.97 and an intraday low of Rs 2.86. 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 over 800 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.