Up 31,500% in a Year! This Packaging Company Sheds its Penny Stock Status

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  
  • Home
  • Views On News
  • Oct 18, 2021 - Up 31,500% in a Year! This Packaging Company Sheds its Penny Stock Status

Up 31,500% in a Year! This Packaging Company Sheds its Penny Stock Status

Oct 18, 2021

Last year in July, the stock of Ruchi Soya Industries was making headlines.

The stock was relisted on the bourses in January 2020 after Patanjali group acquired the bankrupt edible oil company.

It was relisted at Rs 17 and in just a matter of months, it skyrocketed to touch a high of Rs 1,535 on 29 June 2021 - a jump of 8,929%.

The rise in Ruchi Soya's stock price was mainly on account of the low level of free float.

The latest stock which shows eerie similarities and is yet to make headlines is Gopala Polyplast.

About the company

Originally incorporated in 1984 as a private limited company, Gopala Polyplast was listed on the Bombay Stock Exchange (BSE) in 1992-93 and reconstituted as a public limited company.

It manufactures polypropylene woven sacks, primarily used for cement packaging. The company also produces woven labels used for manufacturing garments. 90% of the revenues come from polypropylene woven sacks and fabrics division. It's production units are in Gandhinagar and Silvasa.

--- Advertisement ---
Automobile Sector's Colossal Disruption Could Make You a Fortune

During any major disruption in a sector, fortunes are created.

And now, we are at the cusp of a major disruption that the automotive sector will experience.

It is the electric vehicles gold rush.

At Equitymaster, we have unearthed a hidden way to ride the 15x EV opportunity so that you could take home potentially life-changing gains in the long run.

You can get all details of the hidden way in our upcoming special online event.

YES, Register Me for FREE

Due to financial crisis and default of bank debts and operational creditors, Gopala Polyplast went under corporate insolvency resolution process (CIRP) under the insolvency and bankruptcy code (IBC).

In August 2020, the NCLT, Ahmedabad passed an order approving resolution plan submitted by Plastene India.

The relentless rally

So, what has led to this unstoppable rally in Gopala Polyplast shares?

The logical reasoning behind this could be the low free float.

The company has a total of 10.23 m shares outstanding as of September 2021.

Out of this, 92.8% (nearly 9.5 m shares) of Gopala Polyplast are held by its promoters, leaving only 1.42% (1.4 lakh shares) to the public.

Out of these, only 10,000-15,000 shares are traded daily on an average, making it difficult for retail investors to buy in.

This has sent its stock soaring from just Rs 3 to Rs 1,167.

The stock has been in a never-ending rally due to scarce supply of shares, and people clamouring to buy whatever shares they can get their hands on.

But wait! Here's what you need to know...

Of course, you might be thinking to get your hands on this stock.

Before you do that, consider the fact that the firm has entered stage zero of the insolvency resolution process.

FREE Event: Discover Your First Stock for a Potential Rs 7 Crore in Long-term Wealth

Also, the firm has been in the news for wrong reasons.

Last year in December 2020, CBI booked Gopala Polyplast in case of a bank fraud worth Rs 725.5 m.

The central agency registered a case against the company based on a complaint from Bank of Baroda alleging that accused directors of the firm-Manish Somani and Manoj Somani and Kishorilal Sonthalia-cheated the bank between 2017 and 2019.

Further, it was also alleged the continuous overdraft in the account and devolvement of LCs (letters of credit) resulted in the account becoming NPA (non-performing asset).

Bank of Baroda is a shareholder in the company, holding 5% or 5.1 lakh shares.

Are low free-float stocks good investment bet?

Often, buoyant sentiments completely cloud investors' judgement on the stocks they should buy. They blindly go with the hottest stocks.

There are no fixed reasons why the stock of Gopala Polyplast is seeing such a monstrous rally.

Some classic examples of stocks rallying because of low liquidity can be the sharp rally in Ruchi Soya shares and the most recent saga of Orchid Pharma.

--- Advertisement ---
3 "Super Smallcaps" You Didn't Know About

You may not have heard of these 3 "super smallcaps" ever before...

The mainstream press doesn't cover them... Most brokers don't know about them either...

Stocks like these 3 "super smallcaps" only come to your notice when they have rallied by hundreds or even thousands of percent... and are all over the news!

Richa revealed it all during her Super Smallcaps Summit

If you missed this event for some reason, then you can watch the special replay of this event.

Click Here to Watch the Replay...

In both these cases, the number of shares available to public shareholders was meagre, which lead to a rally of as much as 7,000% in a short span of time.

Another recent example can be of Gita Renewable Energy. Shares of the company skyrocketed 3,600% in the past 18 months, aided by a tiny free float of 1.1 m shares.

While low free float shares offer advantages, not all are worthy investment candidates. Holding on to such stocks could pose the risk of sharp wealth erosion.

As promoters hold a major chunk in these shares, they exercise control over the company and sometimes even manipulate stock prices.

Also, low-float shares fall at the same pace that they have risen.

Large free-float companies are more stable while the ones with smaller public exposure are volatile.

Shares with a higher float are usually the ones with better governance since the promoter has lesser influence and shareholders have more power to exercise their rights.

So before investing in such stocks, one must do their homework. Although low free float companies can be rewarding, they can be equally risky.

Happy Investing!

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...

Equitymaster requests your view! Post a comment on "Up 31,500% in a Year! This Packaging Company Sheds its Penny Stock Status". Click here!


More Views on News

What's Driving the Rally in UFlex Shares Today? (Views On News)

Jun 30, 2021

UFlex shares rallied over 20% to hit a 52-week high of Rs 572.9 today on strong earnings.

More Views on News

Most Popular

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

Nov 24, 2021

Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

6 Popular Stocks that Turned into Penny Stocks (Views On News)

Nov 27, 2021

A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.

How to Find Your Next 10-Bagger in this Market (Profit Hunter)

Nov 19, 2021

The #1 make or break factor in your portfolio you shouldn't ignore.

MobiKwik IPO Opens for Subscription Soon. Key Things to Know Before Subscribing. (Views On News)

Nov 20, 2021

The Rs 19 bn issue is set to hit the market soon.


Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms


Dec 1, 2021 (Close)


  • Track your investment in GOPALA POLY. with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks