Margo Finance - Risky Play

CMP: 2

Margo Finance Ltd. is a non bank financing company. The Company provides financing and leasing services as well as investments.

Margo Finance is a 1 Crore penny cap stock and hence trades on low volumes which makes it risky. It runs at a debt of 10 Lakhs with 2 Lakhs cash on hand. Revenues have risen from 18 Lakhs to 26 Lakhs in the last 5 years. Profits have risen from 5 Lakhs to 11 Lakhs in the last 5 years. Profit margins have risen from 28% to 42% over the last 5 years. Buy for not more than 3000 Rupees and buy only to book profits at higher levels.

hi mani,
I am new to stock market, but I had read your book. I would like to appreciate you, for writing such a simple and practical book.
In the above post , it is mentoined that: " margo finance trades on low volumes, which makes it risky'
---- Please explain the riskiness ( now or in future) in detail, if the company is traded on low volumes:

Originally Posted by mamidiuday

hi mani,
I am new to stock market, but I had read your book. I would like to appreciate you, for writing such a simple and practical book.
In the above post , it is mentoined that: " margo finance trades on low volumes, which makes it risky'
---- Please explain the riskiness ( now or in future) in detail, if the company is traded on low volumes:

Penny cap or small companies normally trade on low volumes ... Meaning less transactions happen during a day ... Once you buy, you may have situations when there might be no buyers at all to sell off ... (Or) no sellers at all to buy from ...

Its risky, when you cannot sell your shares, as there may not be any buyers at all ... One small negative news can spark such a situation