Investing in penny stocks is considered to be highly risky, but some investors with a high risk appetite are drawn to them due to the potential for massive returns in the long term. Stock market experts often compare investing in stocks to investing in a business. Nowadays, many investors are looking towards startups and small companies with promising business models as potential investment opportunities. When high-risk investors believe in the sustainability and profitability of a small listed company, they may add the stock to their portfolio and hold onto it for an extended period, hoping for exceptional returns.
One such example of a multibagger stock is SRF. This chemical stock has a history of providing stellar returns to its shareholders. Over the past 20 years, SRF’s share price has skyrocketed from ₹3.71 in 2002 to ₹2424.50 today, marking an impressive 65,250% increase during this time frame.
In the last month alone, SRF’s share price has risen by approximately 3.5%, while over the past 6 months, the stock has appreciated by around 35%. In the last year, SRF has seen a 125% increase in its share price, and over the past 5 years, the stock has surged by a remarkable 675%. Even over the last decade, SRF’s share price has witnessed a significant rise of around 4350%.
Despite its impressive growth, there was a time when SRF was considered a penny stock in the Indian secondary markets. However, over the years, it has proven to be a successful investment, rewarding those who believed in its potential.
If an investor had invested ₹1 lakh in SRF one month ago, their investment would have grown to ₹1.03 lakh today. Similarly, investments made 6 months, 1 year, 5 years, and 10 years ago would have seen substantial returns, highlighting the stock’s multibagger potential.
Stock market experts remain optimistic about SRF’s future performance, expecting the stock to reach ₹2600 levels in the next month. Advising investors to consider adding SRF shares to their portfolios, Sumeet Bagadia, Executive Director at Choice Broking, predicts a technical breakout above ₹2450, leading to further upside movement in the stock.
For positional investors, maintaining a stop loss at ₹2250 and accumulating on dips may be a wise strategy, especially as SRF is set to enter the Nifty Next 50 and Nifty 100 index by March 31, 2022.
It’s important to note that the views and recommendations mentioned above are those of individual analysts or broking companies and not of Mint.