Investing in small-cap stocks can be a high-risk, high-reward strategy for investors looking to generate outsized returns. Ramkrishna Forgings, a small company that makes various automotive and non-auto parts, is one such stock that has paid off handsomely for investors.

The company’s stock has returned an impressive 77% in the last year and 802% over the past three years, leaving many of its larger peers far behind.

From a 52-week low of Rs 146 per share, the stock has seen an almost one-way surge and gained 132.87% in just nine months to reach an all-time high of Rs 340 in today’s trading session.

The stock has delivered solid returns over the 10 years, rising from Rs 16.30 per share to Rs 336, representing a gain of 1961%.

Domestic brokerage Reliance Securities believes the stock has the potential for further operation and can even break through the previous record high. The brokerage maintained its optimistic view on the stock following the company’s healthy performance in the fourth quarter of fiscal 2023.

On April 29, the company posted a consolidated net profit of Rs 68 crore for Q4FY23, down 19% year-on-year due to higher expenses. However, net profit increased by 11.47% quarter-on-quarter.

It reported a 24% year-on-year increase in revenue to Rs 8.92 crore, with sales up 20% year-on-year. The company is doing better in the export than the domestic market. In Q4FY23, export revenue rose 29.2% year-on-year, while domestic revenue rose 17.4% year-on-year.

The company received new contracts worth Rs 775 crore from various geographies and business verticals during the quarter. In addition, the company recently won a major contract from Indian Railways as a joint venture (RK owns 51% of the joint venture).

The order is for the supply of 15,40,000 forged wheels to Indian Railways over 20 years. The order value is Rs 12,500 crore.