Chhimek Laghubitta (CBBL) is one of the leading companies in the microfinance sector. It was established in December 2001. It works to provide access to finance to poor and marginalized women members in 63 districts through 126 branches across Nepal. The company has shown dramatic progress in the last few years. As of now, the company has a paid-up capital of 118 crores. The company has provided huge dividends to its shareholders in the past five years. Last year also, it distributed 18 percent bonus and 22 percent cash dividends to the shareholders.
Chhimek is now considered as one of the blue-chip stocks of the microfinance sector after demonstrating tremendous growth in few years period. After the market crashed by more than 40 percent, many investors suffered by picking overvalued stocks at a very high price. So, the price history of Chhimek Laghubitta in the Nepalese stock market will help you realize why selecting good companies is extremely necessary to hold on to your investment portfolio during tough times.
PRICE HISTORY OF CHHIMEK LAGHUBITTA IN THE STOCK MARKET
Chhimek Laghubitta trades in Nepalese share market under the symbol CBBL. As shown in the graph, the maximum trading price of CBBL is Rs. 2,585. The stock price surged during the crazy bull period observed in 2016. Initially, the price surge started in the year 2013. The initial price of the company’s stock was Rs. 375. The price of the company increased by almost 2.62 times in the same year to record a maximum price of Rs. 980 in the same year. Likewise, the company also resisted a huge market crash by showing tremendous growth during the bear market starting from 2017. The lowest recorded price in the bear market was Rs. 790 in 2018.
Counting from 2013, the paid-up capital of the company has increased by 4.98 times. This means if you have purchased 100 shares of Chhimek, then now you would have 498 unit shares of the company in your portfolio. Likewise, the price has increased by 2.66 times if we take Rs. 1000 as the current price. So, your total worth would have increased by approximately 13.25 times.
Likewise, if we look at the cash dividend provided by the company, shareholders would recover 70 percent of their initial investment until now. For instance, if you had invested 1 lakh in Chhimek stocks you would have received almost Rs. 70,000 in cash dividend. Your 1 lakh investment would turn into the market value of more than 13 lakhs at the current trading price. ( Re-investment of cash dividend and tax has not been considered in the calculation.)
BREAKING DOWN BULL AND BEAR
How much would you have profited if you had invested on CBBL stock in early 2013 and sold it in during bullish 2016?
At the beginning of 2013, CBBL was trading in the stock market at Rs. 375. So if you had held these shares until mid-2016, then you could sell it at Rs.2,585 per share i.e. an increase in price by almost 6.9 times. On the other hand, after receiving bonus shares during this period your shareholdings would increase by 2.52 times. As a result, your net worth would have increased by (6.9*2.52) 17.39 times.
How much would you have lost if you had invested on CBBL stock in mid-2016?
After investors enjoyed the crazy bull period, they also faced a nightmare as the Nepalese share market crashed by almost 40 percent. Nepse index dropped from 1881 to 1100 within a 2 and a half year period. So, you may be interested to know how much did good stocks resisted during this downfall? Chhimek can be a perfect stock to analyze this scenario. Those shareholders who purchased Chhimek stocks during the bull time at Rs. 2,585 will breakeven at Rs. 1,068. The current trading price of CBBL is around Rs. 1,000. This means the stock needs to grow by a small margin to breakeven. This shows that good stocks will eventually bounce back after the market recovers from the downfall.
What we can conclude by analyzing the price history of CBBL is that holding stocks of a good company for a longer period gives you a good return on your investment. Likewise, stocks of a company with good growth and fundamentals will also be valued by the investors. So, they will surely make a comeback even if the market declines sharply for a period of time. In the long run, good will be valued good by the sensible investors and they will regain their status in the stock market.
To know more about Chhimek Laghubitta and its five-year performance, click here.