It may seem like investing in the stock market requires ample funds, but there are companies whose shares cost minimal amounts and can be added to your portfolio easily. These are called penny stocks, essentially small company shares that trade at low prices. They are typically characterized by their high volatility and potential for substantial gains or losses.
These stocks are usually traded over-the-counter (OTC) or on smaller exchanges and are not often listed on major stock exchanges. Penny stocks, often priced below ₹10 or ₹20, have the potential to offer significant returns. Investing in them can be enticing but also challenging, as they come with higher risks.
Top 10 Penny Stocks of 2024
- GTL Infrastructure
- Jaiprakash Associates
- Filatex Fashions
- Sarveshwar Foods
- Vikas Lifecare
- Devangere Sugar Company
- FCS Software Solutions
- Vikas Ecotech
- Mangalam Industrial Finance
- Nila Spaces
Here’s an overview of the companies in the list of top 10 penny shares:
1. GTL Infrastructure Limited:
| Market Cap (₹ Cr)3,765 | CMP (₹)2.91 | All-Time High (₹)99.10 | PE Ratio– | 5 Yr CAGR Return35% | ROCE (FY24)– |
Data sourced from Screener, as of 31 July 2024
India’s independent telecom tower company, headquartered in Navi Mumbai, Maharashtra, has pioneered the shared passive telecom infrastructure space in India. With about 28,000 towers across 22 telecom circles, telecom service providers can offer 2G, 3G, and 4G services nationwide.
The company’s turnover in FY24 fell to ₹1,372 Cr from ₹1,458 Cr in FY23; its net loss decreased from Rs ₹1,817 Cr to ₹681 Cr. The net loss for the company has consistently been above ₹1,000 Cr since 2017.
2. Jaiprakash Associates Limited (JAL)
| Market Cap (₹ Cr)1,969 | CMP (₹)As of 31 July 24 8.30 | All-Time High (₹) 323.73 | PE Ratio– | 5 Yr CAGR Return31% | ROCE (FY24)3.15% |
Data sourced from Screener, as of 31 July 2024
A diversified infrastructural industrial conglomerate, its business spans engineering and construction, cement manufacturing, energy, expressways, real estate, and hospitality. JAL has executed hydropower projects generating 10,290 megawatts of power in India and Bhutan.
JAL’s financial performance has been volatile, and it faced significant challenges in the past. However, the company has a strong presence and reputation in the domestic and international markets, with a diverse range of products and a commitment to quality. While it witnessed a revenue of ₹6,568 Cr as on March 2024 (FY24), its net loss was ₹1,339 Cr during the same period.
According to reports, the Adani Group is considering acquiring the cement assets of Jaiprakash Associates Ltd (JAL), which have a capacity of over 9 million tonnes per annum. This potential acquisition follows lenders’ initiation of insolvency and bankruptcy proceedings against JAL in early June.
3. Filatex Fashions Limited:
| Market Cap (₹ Cr)1,212 | CMP (₹)As of 31 July 24 ₹7.72 | All-Time High ₹78 | PE Ratio137 | 5 Yr CAGR Return26% | ROCE (FY24)1.07 % |
Data sourced from Screener, as of 31 July 2024
One of India’s oldest names in socks manufacturing, it produces quality cotton, woollen, and silk socks using Italian, Korean, and Chinese technologies. The company markets its products worldwide, catering to the fashion industry.
Filatex has posted a revenue of ₹171 Cr for FY24 and a net profit of ₹9 Cr during the same period.
Filatex Fashions recently approved a 1:5 stock split and the subdivision of shares, which is expected to boost its stock’s liquidity in the capital market. The company also plans to establish a wholly-owned subsidiary for textile exports in Delhi, establish a corporate office in Mumbai, and appoint senior managerial personnel.
4. Sarveshwar Foods Limited:
| Market Cap (₹ Cr)₹909 | CMP (₹)As of 31 July 24 9.29 | All-Time High (₹)15.7 | PE Ratio111 | 5 Yr CAGR Return58% | ROCE (FY24)9.05% |
Data sourced from Screener, as of 31 July 2024
Sarveshwar Foods SFL, a member of the Sarveshwar group, is engaged in the processing and marketing of both branded and unbranded basmati and non-basmati rice for domestic and export markets. The company is based in Jammu and Kashmir. Their product range includes white raw, steamed, broken, brown, and parboiled rice. The company also offers a variety of other organic products, including cereals, pulses, spices, oil, and ghee. With a total standalone revenue of ₹378 Cr as on March 2024, the company clocked in a net profit of ₹8 Cr in the same period.
Sarveshwar Foods stock increased by 5% following a 91% year-over-year growth in revenue from operations and securing an export order valued at approximately 6 million USD. The company’s EBITDA for Q4 FY24 increased by 26%, while profit grew by 129% year-over-year. For FY24, revenue from operations grew by 26% YoY, with EBITDA increasing by 72% YoY. FY24 profit rose by 115% compared to the previous year.
5. Vikas Lifecare Limited:
| Market Cap (₹ Cr)3,867.72 | CMP (₹)As of 31 July 24 5.17 | All-Time High (₹)17.01 | PE Ratio243 | 5 Yr CAGR Return14% | ROCE (FY24)5.86% |
Data sourced from Screener, as of 31 July 2024
A leading provider of high-end specialty chemicals globally, Vikas Lifecare Ltd creates value-added safer alternatives in product applications across industries using world-leading technology and chemical science. Their core areas include polymer, rubber compounds, and additives for plastics and synthetic/natural rubber.
The company is almost debt-free and has posted a net profit of ₹13 crores in FY24, after a net loss of ₹16 crores in FY23. It has also shown a profit of ₹29 crores in FY22.
6. Davangere Sugar Company
| Market Cap (₹ Cr)706 | CMP (₹)As of 31 July 24 7.50 | All-Time High (₹)12 | PE Ratio58.5 | 5 Yr CAGR Return– | ROCE (FY24)6.86 |
Data sourced from Screener, as of 31 July 2024
Founded in 1970 in Karnataka, the prominent player in sugar manufacturing focuses on innovation. It has expanded its operations to include sustainable power and ethanol solutions. The company boasts a robust infrastructure with a large-scale sugar plant and extensive warehousing facilities.
Further, Davangere Sugar plans to produce ethanol primarily from maize and other damaged grains until the crushing season begins in October 2024. The company aims to procure larger quantities of maize from various regions across the country to maximize production.
The company has shown a profit growth of 31.5% CAGR over the last 5 years and an improvement in debtor days from 54.5 to 31.1 days. The company’s profits have been steady at around ₹12-13 Cr over the last two years.
7. FCS Software Solutions
| Market Cap (₹ Cr)658 | CMP (₹)3.86 | All-Time High (₹)11.43 | PE Ratio120 | 5 Yr CAGR Return67% | ROCE (FY24)3.13% |
Data sourced from Screener, as of 31 July 2024
FCS Software Solutions Ltd is a leading IT services provider and operates in the United States, India, and the Middle East. The company boasts two wholly-owned subsidiaries and three strategic business units focusing on application maintenance, IT consulting, and education/infrastructure management. Founded in 1993 as Fateh Computer Services Pvt Ltd., FCS has significantly expanded over the past two decades, entering new markets, growing delivery centers, and launching international subsidiaries.
After posting a loss of ₹5.52 Cr for Q2FY24 and ₹4.01 Cr for Q3FY24, the company has considerably reduced the loss to ₹1.13 Cr in Q4FY24. Its sales have been consistently around ₹8 Cr to ₹10 Cr every quarter for the last few years.
8. Vikas Ecotech
| Market Cap (₹ Cr)669 | CMP (₹)As of 31 July 24 3.78 | All-Time High (₹)24.66 | PE Ratio101 | 5 Yr CAGR Return3% | ROCE (FY24)– |
Data sourced from Screener, as of 31 July 2024
Vikas Ecotech (VEL) is an integrated, multi-speciality product solutions company that manufactures eco-friendly rubber-plastic compounds and additives essential for producing a wide range of environmentally neutral and safety-critical products. Additionally, VEL produces various high-end specialty chemical products and trades in TMT bars, steel, HR coils, CR coils, ERW pipes, and coal. Notably, VEL is India’s sole manufacturer of Organotin (heat stabilizers for vinyl applications). The company has a strong track record in providing sustainable solutions.
VEL has significantly reduced its debt and is now almost debt-free, besides posting sales of ₹258.63 Cr in FY24 and a net profit of ₹6.84 Cr. Its operating margin was up from 6% to 7%, although sales fell from ₹397 Cr in FY23. For Q4FY24, the company posted sales of ₹59.7 Cr and a net profit of 2.06 Cr. The company’s stock has given a CAGR of 26% over the last three years.
9. Mangalam Industrial Finance
| Market Cap (₹ Cr)442 | CMP (₹)As of 26 July 24 4.07 | All-Time High (₹)28.49 | PE Ratio– | 5 Yr CAGR Return65% | ROCE (FY24)0.91% |
Data sourced from Screener, as of 31 July 2024
Mangalam Industrial Finance Ltd (MIFL), has been offering a range of non-banking financial services in India, including investment and trading in shares and securities, mutual funds, corporate and personal loans, trade financing, and various other financial services. A key player in the NBFC segment, the company provides financial assistance to various industries and has a strong customer base.
This penny stock has given a CAGR of 65% over the last five years and has recently increased its borrowings limit to ₹150 Cr, although it is a zero debt company at present and earned a net profit of ₹19 lakh on a sales of ₹3.54 Cr for FY24.
10. Nila Spaces
| Market Cap (₹ Cr)359 | CMP (₹)As of 26 July 24 9.14 | All-Time High (₹)10.70 | PE Ratio26.8 | 5 Yr CAGR Return43% | ROCE (FY24)17.1% |
Data sourced from Screener, as of 31 July 2024
This dynamic real estate development company focuses on creating sustainable and modern living spaces and delivered multiple residential and commercial projects.
Nila Spaces executes projects for various government and semi-government entities and undertakes turnkey civic urban infrastructure developments. The company is developing prime real estate with large land reserves in and around Ahmedabad and undertakes various businesses through subsidiaries, associates, and joint ventures.
The company has acquired development rights for 5.40 lakh sq. ft. of built-up area at GIFT City – Gandhinagar to develop and sell residential projects. It is currently developing a luxurious residential scheme named ‘VIDA’ at GIFT City, featuring architectural design by an internationally renowned firm. The development includes the SKY Park building, which boasts a 65,000+ sq. ft. dedicated area for amenities and twin towers connected by sky bridges.
The company has considerably reduced its debts to near-zero and posted a profit of ₹13 Cr on sales of ₹91 Cr for FY24. This is its highest net profit and sales to date. Further, it has had a CAGR of 43% over the last five years.
ConclusionPenny stocks offer the potential for substantial returns but come with big risks, too. To navigate this volatile market effectively, thorough research, careful consideration, and financial consulting firms are essential.
Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & the certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.
FAQ
What are penny stocks?
Penny stocks are small companies’ shares that trade at low prices, usually below ₹10 or ₹20. They are known for their high volatility and potential for significant gains or losses.
How to Find Penny Stocks to Buy?
Finding penny stocks in India requires thorough research and a keen eye for detail. To identify potential penny stocks, look for companies with strong financials, low debt, and positive cash flow. Even though penny stocks are low-priced, the underlying companies should have a solid business model, which is scalable and sustainable, with a clear path to growth. You must also keep an eye on market trends and sectors that are expected to grow. Sectors like technology, pharmaceuticals, and renewable energy often have promising penny stocks.
It’s crucial to stay updated with news and developments about the companies you are interested in. Significant news can impact stock prices. Analyze companies’ quarterly and annual financial reports to understand their financial health and future prospects. Utilize stock screeners on financial websites to filter out penny stocks based on your criteria. Last but not the least, stock advice from professional financial firms who can guide you with their expertise.How to Invest in Penny Stocks?
Investing in penny stocks can be advantageous if done correctly. Now that you know what are penny stocks, here’s a step-by-step guide to help you invest in them:
Open a Demat and Trading Account with a registered broker.
Research the company thoroughly, including its financials, management, business model, and market potential.
Given the high risk of penny stocks, start small to mitigate potential losses.
Diversify your investments to spread the risk.
Monitor your investments closely since penny stocks can be highly volatile.
Have realistic expectations regarding returns. While penny stocks can offer high returns, they can also lead to significant losses.
Be patient since investing in penny stocks may take time to realize their potential.
I’m Archana R. Chettiar, an experienced content creator with
an affinity for writing on personal finance and other financial content. I
love to write on equity investing, retirement, managing money, and more.
