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Bottoming stocks flare 100-1,500%

B G Shirsat

Stocks which plummeted to their 52-week lows during the last six months gave huge returns. One hundred and sixty four such stocks, identified by the Business Standard Research Bureau, which plumbed their year's lows after September 2001, have turned out to be a gold mine for investors. Their prices flared by 100 per cent-1,500 per cent in the subsequent period.

The returns on the stock indices, over the September 21 level when stock indices declined to almost a nine-year low, vary between 33 per cent (Sensex up 33.82 per cent, S & P CNX Nifty up 33.3 per cent) and 52 per cent (BSE 500 and BSE 200 up around 52 per cent).

Of the 164 stocks studied, the value of four increased 10 times (10 baggers), or by 1,000 per cent. As many as 17 stocks became 5-10 baggers, and 64 others 3-5 baggers. The rest have doubled in value during the period.

Hinduja TMT fell to Rs 32 on September 26 in line with the continuing meltdown in second-rung technology stocks after September 11, 2001.

The booster came from the healthy performance in the quarter ended September 30, 2001. The stock became a 10 bagger in six months.

MphasiS BFL soared to Rs 646.95 on April 11 from Rs 70.35 on October 12, 2001, up 820 per cent. The Financial Technology scrip gained 708 per cent from Rs 7.50 on September 26 to Rs 60.60 on Thursday, even though the company reported a loss of Rs 67.5 million in the nine months between April-December, 2001. The upside is that the company is engaged in a single business segment, providing end-to-end straight through processing (STP) technologies.

The other winners were Fortune Information, up 1,289 per cent at Rs 69.45, Mastek, up 592 per cent at Rs 366.60, IT & T, up 563 per cent at Rs 48.10 and Blue Star Information, up 570 per cent at Rs 194.70.

Take also Praneta Industries, an unknown penny stock trading at Re 0.90 on March 6, 2002. A month later, it surged to Rs 13.45 (April 10), registering a 1,500 per cent rise.

The market was unfavourable to KPIT Infosystems which declined to almost an all-time low of Rs 13 in September, 2001. The numbers for the October-December 2001 quarter, too, were not favourable.

However, investors bet on this stock for the simple reason that during 2001-2002 the company added six new customers who had the potential to bring significant business during 2002-03. The stock became a top multi-bagger with a 1,353 per cent rise in market price.

Apple Amusement bottomed out at Rs 2.65 on October 17, 2001. Operators entered at this juncture and the stock went up to Rs 25.15 on April 11, 2002, getting returns of almost 10 times.

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