The year 2022 has been tumultuous one for equity investors as global inflation and widespread central bank tightening meant that stocks ceased to give lip-smacking returns.
But for the brave, or perhaps even the foolhardy, bets on some stocks proved to be the best ones even beyond their imagination. In fact, the biggest multibagger of 2022 has turned out to be a little-known coal supplying company and it owes its fortune to the energy crisis.
Shares of Hemang Resources Ltd, formerly known as Bhatia Industries & Infrastructure Ltd, surged over 2,277 percent this year. Beginning the year at Rs 3, the share now trades at Rs 70. The company is into coal trading and infrastructure. The company sells imported and indigenous coal. It also trades in land, and provides stevedoring and logistics services.
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While penny stocks inspire very little confidence, Hemang Resources has reported a surge in its revenue. For the six month ended September 2022, revenue was Rs 155.53 crore while net profit for the period stood at Rs 19.52 crore.
But revenue was nil in the corresponding April-September period of FY22 and the company had reported a net loss of Rs 5 lakh. Clearly, the company’s fortunes seem to have changed dramatically in FY23. Hemang Resources owes this largely to the changing landscape of India’s coal imports. Recall that coal imports surged after a rise in electricity demand triggered by intense heat waves in the last two years.
Coal import by the power sector in April-October this year stood at 38.84 million tonnes, Parliament was informed on December 7. The cost of imported coal in India is expected to rise 35 percent in the fiscal year 2022-23 compared to the past year, according to analysts.
Coal suppliers such as Hemang Resources have benefited from this demand and increase in pricing. While this may partly justify the surge in the share price, it does not entirely explain it. To be sure, penny stocks are volatile, illiquid and considered highly risky. To that extent, the climb of Hemang Resources’s shares must be viewed with caution.
Hemang Resources was originally established as a non-banking financial company named BCC Housing Finance and Leasing Company Limited in 1993. The name was changed in 1994 and again in 2006 to Bhatia Industries & Infrastructure Limited and finally to Hemang Resources in 2015. The core business too has changed to coal trading now.
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