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From Printed Circuit Boards to Biscuits: The 6000% Surge of a Penny Stock

Editor – Sai Janani

Introduction:

The Indian stock market experienced a roller-coaster ride in 2023. Despite facing challenges in the initial months, the market displayed remarkable resilience. The NSE has secured a prominent global position, standing as the third-largest exchange worldwide based on the number of trades in the cash market segment. Nifty 50 and Sensex achieved impressive gains of nearly 20% and over 18%, respectively. Amidst this landscape, Indian investors found fortunes in penny stocks, leveraging the ongoing market rally. Integrated Industries Limited emerged as a standout wealth creator, experiencing a whopping surge of over 6,000% and capturing the attention of investors.

Integrated Industries Ltd.

Integrated Industries Ltd., formerly known as Integrated Technologies Limited, underwent a major transformation in 2023. Originally engaged in the production of high-quality printed circuit boards (PCBs), the company faced challenges, including a hiatus in production and nine years of zero revenue and losses.

The journey took an interesting turn when it rebranded itself as Integrated Industries Limited in July 2023. The company shifted its focus to the food industry, specializing in organic and inorganic food products, bakery items, and other processed foods. It manufactures biscuits and cookies under the brands Richlite, Funtreat, and Canbeera at production facilities in Neemrana, Rajasthan. These products are sold across the North Indian market as well as in overseas markets such as the UAE, Somalia, Tanzania, Kuwait, Afghanistan, the Congo, Kenya, Rwanda, and the Seychelles.

Notably, the company acquired Nurture Well Foods Pvt. Ltd., gaining a biscuit manufacturing plant in Neemrana, Rajasthan, and a Sharjah-based subsidiary, Nurture Well LLC. The firm recently announced the issuance of 2.05 million warrants worth ₹366 crore, with participation from the Manan Garg promoter group and Pirmus Overseas Pvt Ltd. The strategic move proved to be a game-changer for the company, positioning it as a top wealth creator in the Indian stock market with a remarkable market cap growth of 239 crores, reaching almost ₹4 billion.

Financial Turnaround:

Integrated Industries reported a remarkable turnaround in the June and September 2023 quarters, marked by positive revenue and profits. The financials for the fiscal year 2023 revealed a net profit of ₹1.17 crores and ₹1.3 crores in June and September. The total debt, which was ₹5 crore in FY22, saw a significant decline to ₹1.08 crore in FY23. By September, the debt stood at a mere ₹ 70 lakh, reflecting robust financial health.

However, it’s crucial for investors to note the low float of Integrated Industries’ stocks. The promoters hold 56.59% and FIIs hold 6.91%, with only 36% available for open-market trading. The amount of floating stock a company has can affect the liquidity of that stock. Historically, stocks with larger free floats are considered more stable, indicating better governance and reduced promoter influence. Low-float shares, while potentially rewarding, can be equally volatile. In the first half of 2023, the shares of KIOCL and ITI experienced a remarkable surge, with each of them surging by more than 100%, effectively doubling in value. However, back in October, their intraday values plummeted by 15% from their daily highs.

The Speculative Nature of Stock Rallying:

Another important point to note is the speculative nature of the stock rally. The cautionary tale of Vakrangee Ltd. in 2018 serves as a reminder for investors to exercise restraint and conduct thorough research before joining speculative rallies. The company’s surge from around ₹50 in April 2015 to a massive ₹515 in January 2018 was marked by speculative trading and investor enthusiasm. However, as allegations about corporate governance, price manipulation, and regulatory issues arose, 45% of its market capitalization was wiped out in less than a fortnight. The stock then went on to lose nearly 90% of its value within a short period, falling to levels below ₹50 per share.

Conclusion:

Integrated Industries Ltd.’s transformation from a printed circuit board manufacturer to a food product manufacturer highlights its adaptability and strategic vision. The company posted a net profit significantly higher than in previous years, triggering a speculative rally in this microcap stock. While this rally has brought optimism, historical instances advocate restraint for investors to conduct thorough research and due diligence, especially with low-float stocks like Integrated Industries. As the company navigates the complexities of the market, its future trajectory will undoubtedly be closely watched by investors and market analysts alike.

References:

https://www.livemint.com/market/stock-market-news/indias-best-performing-stock-of-2023-gained-over-6000-11703573738791.html

https://www.moneycontrol.com/news/business/earnings/here-are-the-10-biggest-wealth-creators-of-2023-do-you-own-any-11901631.html

https://www.icicidirect.com/stocks/integrated-industries-ltd-share-price

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