Shares of Vegetable Products Ltd., a maker of edible oil products with no revenue in 2020-21, have risen more than 200% in just 21 days. This company has provided incredible gains of about 1,000% to its shareholders in the last year amid investors’ mania for small companies’ shares, despite the weak fundamentals.
With the major indexes confined in a somewhat dull trading range, investors have moved to considerably riskier penny stocks to achieve enormous gains. Penny stocks, which are incredibly cheap and have a limited market capitalisation, are not particularly attractive investment options, but they are currently on everyone’s radar, and thanks to the social media platforms this mania keeps getting the fuel.
Vegetable Products, founded in 1953 with the manufacturing of vegetable edible oil products under the ‘Pratap Vanaspati’ brand, has given its investors tremendous profits. Despite weak financial results, the stock beat its industry counterparts. The firm lost Rs. 15.60 lakh for the FY 2020-2021, but its turnover was nil owing to the discontinuation of production since July 2011. As of 31 March 2021, its paid-up equity share capital was Rs. 10.92 cr.
It has risen 985% in the previous year, from Rs. 2 on 28 December 2020, to Rs. 21.17 on 28 December 2021. In comparison, the BSE Sensex, which gauges the market capitalization of the country’s top 30 firms, has risen 22% in the last year, while the NSE Nifty has risen 24%.
According to the market analysis portal Markets Mojo, the company was trading above its 5-day, 20-day, 50-day, 100-day, and 200-day moving averages. Investor engagement in the stock decreased, with delivery volume decreasing by 98.5% compared to the 5-day average delivery volume.
Vegetable Products Limited was trading riskily, with a negative book value, indicating that the company’s total liabilities exceeded its total assets.
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