Penny stocks are the stocks which have very low price, very low market cap and are mostly illiquid. These stocks are usually listed on smaller exchange, and in India, these stocks can have prices below INR10. Since these have a very low market cap, such stocks are speculative in nature and are highly risky due to lack of liquidity. Such stocks have lower number of shareholders and have large bid-ask spreads. More often than not, such stocks tend to rise on the basis of news such as when they receive new orders or they form strategic alliances, etc. Therefore, what can be better than a situation where a penny stock touches 52-week high post receiving new order? When a penny stock touches 52-week high, most of the investors decide to book profits. However, some individuals tend to hold for long-term.
If a penny stock touches 52-week high, this must have been supported by some sort of positive news which is getting reflected in the share price. Let’s explore the stock and the industry!
The engineering services market size should be able to compound at ~4.20% to grow from $1.60 trillion in 2023 to $1.96 trillion by 2028 between forecast period (2023-2028). Market size exhibits revenue generated from several types of services including product engineering, process engineering, and automation-related services, offered by market players. Experts believe that engineering services market growth is not evenly distributed throughout regions. For example, the US, China, Germany, and Japan are considered as largest country markets for engineering services. However, a range of smaller country market segments should register much higher growth in comparison to these giants. For example, Japan has been categorised as one of the leading engineering services market but lags behind some of the emerging economies including India, South Africa, and Brazil in terms of future growth.
In India, this market is being supported by digital transformation and growth of industries including chemicals, petrochemicals, and pharmaceuticals. Talking about the market trends, automotive sector continues to hold major market share. Given the increased demand for innovation in advanced connectivity features, automotive OEMs continue to develop electronics and software for passenger and commercial vehicles. This is because they try to stay ahead of their competitors.
Higher demand for ADAS for vehicle safety and government regulations regarding compulsory use of ADAS in new vehicles continue to support market growth. In July 2022, new European rules were rolled out, which require new vehicles to be loaded with mandatory advanced driver-assist systems. This is to improve road safety. Latest safety regulations should be able to help protect passengers, cyclists, and pedestrians throughout European Union and should save over 25,000 lives and avoid minimum 140,000 severe injuries by 2038. Experts believe that increased adoption of EVs globally and installation of EV charging infrastructure should further boost market growth. As per International Energy Agency (IEA), total EV fleet (excluding 2-and 3-wheelers) should increase from more than 30 million in 2022 to ~240 million by 2030, exhibiting an average growth rate of ~30%.
Ameya Precision Engineers Limited
Ameya Precision Engineers Limited has been categorised as leading manufacturing company of Engineering components and was established in 1987. It has been awarded Star Export House for the FY23. The company maintains a base of reliable material suppliers, foundries and casting suppliers providing high quality, independently certified materials which have appropriate dimensions.
FY23 was another positive year for the company as it announced Ameya Precision Engineers Limited IPO at the SME Platform on NSE. The company saw an overall growth in FY23 with growth in PAT of 19%. Total sales of the company grew by 119.85% to INR2,850.76 lakhs in FY23 in comparison to INR2,378.49 lakhs in FY22. Revenue from operations of the company came in at INR2,850.76 lakhs in FY23 against INR2,378.49 lakhs in FY22. Its total income was INR2,890.70 lakhs in FY23, while in FY22, it was INR2,396.36 lakhs.
It has a good business outlook for upcoming few years, supported by factors including significant unutilized capacity, combined with core competencies like excellent sourcing of raw material sourcing, inbuilt infrastructure and capacity, and diverse clientele and revenue streams. This continues to be supported by tailwinds from industry and governmental impetus. The company focuses on increasing its diversity in several other sectors and regional diversity. Given its focus on diversification, it has explored and bagged trial orders in defense sector and it hopes to get bulk orders in future in such sectors.
Indications from current customers, and a range of efforts which are being made to bring in new customers and new segments should help the company meet targets in FY24. Focus is on investing in technical capabilities, through adding machine capacity, where required, which should make sure that the company can meet higher customer demand. New sectors and new opportunities available with existing customers, which were identified last year, are now in process of providing samples or first orders. This should help in increased revenue in FY24.
Additionally, the present situation between US and China means that there is a global focus on having China + 1 supply chain policy. Given the fact that the company has long established relations in the overseas market, it should be able to take advantage of this scenario.
Trading information
On 30th August, the shares of penny stock touches 52-week high as it has received new order. It has received purchase order from Defence Research and Development Organization (DRDO)- Armament Research & Development Establishment (ARDE), a Government of India, Ministry of Defence regarding the supply of PCB Empty Assy (LR-LACM). This receipt of purchase order is worth INR91,34,002/- (inclusive of taxes) and should add value to the company’s customer base in the new sector of defense. Apart from this, the company should see some improvement in its profitability.
When this penny stock touches 52-week high, there were some investors who booked profits and, as a result, the stock closed at INR67.50 (up by 16.38%) on NSE.
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