Raj Rayon Industries: This stock has delivered nearly 22,000% returns in 5 years and is priced below Rs 50

The broader markets in India have revealed some gems for equity investors. Data showed that at least 15 stocks that are still trading below Rs 50 have managed to deliver over 1,000 per cent returns over the past five years. Shares of Raj Rayon Industries have climbed the most 21,963 per cent to Rs 41.92 on September 7, 2023 from Rs 0.19 on September 7, 2018.

Ritesh Properties & Industries, RRIL Ltd, Lloyds Engineering Works and Agarwal Fortune India have also surged 4,100 per cent, 3,963 per cent, 2,534 per cent and 2,254 per cent, respectively, during the same period. Shares of these companies were available somewhere between Rs 19 and Rs 43 on September 7.

While retaining his bullish view on the Indian equity market, Mumbai-based investor Vijay Kedia said, “Sectors such as infrastructure, public sector banks and telecom equipment manufacturing companies may deliver solid returns to investors going ahead.”

On the other hand, Abhishek Banerjee, Founder and CEO of Lotusdew Wealth and Investment Advisors said, “Small- and nano-cap companies are promoter-led. Investors must look at the ecosystem of possible market makers, quality of board governance and quality of existing shareholders’ and earnings quality as a way to screen them. Also, they need to focus on hard-to-change facts like the number of locations they operate in, diversity and perceived independence of the board to name a few.”

Danube Industries, TTI Enterprise, J Taparia Projects, Cressanda Solutions, Visagar Financial Services, Avance Technologies, MIC Electronics, 3I Infotech, Baroda Extrusion and Regency Ceramics stood among other companies which have rallied between 1,000 per cent and 1,610 per cent in the last five years.

Banerjee further added that select small-caps will deliver handsome returns to investors going ahead. “The main reason is that they are focused businesses and have dominant business models in the areas they operate in. We view them as micro monopolies. Apart from this, it’s well known that over a 10-year period, nominal GDP and large-cap returns have had the same CAGR historically and small-caps always add another 2-3 per cent on top of it going by historical records and we don’t see why this will be different over next 10 years,” he added.

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