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What’s the similarity between buying a lottery ticket and investing in penny stocks?
Right- It’s a game of luck. You either lose your capital or make a fortune.
Take Sri Adhikari Brothers Television Network, for example, which was the top penny stock of 2024. Its stock price rose by more than 72,000% in one year, from ₹2.50 to make a high of ₹2,260. The crazy part is that it has negligible business operations and is a loss-making enterprise with deteriorating financials.
For retail investors who bought the stock at the beginning, it’s like a lottery, but the real challenge is now selling the stocks. The stock is locked at the upper or lower circuit at the start of each trading day, making it extremely difficult to sell.
Also Read: Penny Stocks in India Below 1 Rupee
How to Identify the Best Penny Stocks?
To identify the best penny stocks for 2025, you need to monitor the daily trading volume in such stocks. A spike in volume often signals increased investor interest or news related to the stock.
More often, traders monitor volume to detect breakouts or confirm trends. Rising prices with increasing volume often indicate a strong trend, while rising prices with declining volume may signal a potential reversal.
Use stock filters and screeners to identify such multibagger penny stocks that may offer good returns in the short term.
However, the real risks of investing in penny stocks are, most of them don’t have strong fundamentals and are prone to price manipulation.
Also Read: Upcoming Multibagger Stocks
Fundamentally Strong Penny Stocks for 2025
We have identified the fundamentally strong penny stocks for 2025 based on the following parameters:
- Have shown 3-year Revenue CAGR of more than 15%
- Have shown 3-year PAT CAGR of more than 15%
- Have more than industry Return on Equity (ROE)
- Have less than Industry PE
- And, are priced less than ₹20
After applying the filters, we have shortlisted the following top fundamentally strong penny stocks:
- Easy Trip Planners
- Shish Industries
- Vikas Ecotech
- Axita Cotton
- Adroit Infotech
Easy Trip Planners
The company offers a wide range of travel-related services like flight, hotel, train, bus, cabs through its online platform- EaseMyTrip.
It also offers value added services like travel insurance, visa processing, and tickets for activities and attractions.
The company has recently made a strategic acquisition of Dubai-based Pflege Home Health Care Center for Rs 30 crore marking the company’s entry into the healthcare and medical tourism sector.
| CMP (24th December 2024) | ₹16.5 |
| Market Cap | ₹5,837 crores |
| 3 year Compounded Sales Growth | 52% |
| 3 year Compounded Profit Growth | 38% |
| Return on Equity (FY24) | 23% |
Shish Industries Ltd
Shish Industries Limited is a Gujarat-based provider of custom industrial packaging solutions which has carved out a unique space in material handling, insulation, and packaging. It offers industrial packaging solutions, roofing and insulation products, and consumer packaging materials.
| CMP (24th December 2024) | ₹12.8 |
| Market Cap | ₹486 crores |
| 3 year Compounded Sales Growth | 45% |
| 3 year Compounded Profit Growth | 85% |
| Return on Equity (FY24) | 18.19% |
Vikas Ecotech
The company was incorporated in 1984 and is a high-end speciality chemical player in India that produces a wide variety of superior quality, eco-friendly rubber-plastic compounds and additives. Its products are used in automotive, cables to electricals, healthcare, packaging, textiles, footwear industry.
Vikas Ecotech exports its products in 20 countries spread across four continents.
| CMP (24th December 2024) | ₹3.24 |
| Market Cap | ₹573 crores |
| 3 year Compounded Sales Growth | 29% |
| 3 year Compounded Profit Growth | 35% |
| Return on Equity (FY24) | 2.15% |
Axita Cotton
Established in 2013, Axita Cotton is Gujarat-based manufacturer and exporter of International quality cotton bales. In 2018, the company successfully launched its IPO raising ₹10.5 crores and was initially listed on the BSE SME platform and was gradually listed on the main board of BSE and NSE.
| CMP (24th December 2024) | ₹11.2 |
| Market Cap | ₹390 crores |
| 3 year Compounded Sales Growth | 21% |
| 3 year Compounded Profit Growth | 76% |
| Return on Equity (FY24) | 34.78% |
Adroit Infotech
Adroit Infotech Ltd, founded in 1990, specializes in SAP Support Services. The company helps firms decrease costs and improve effectiveness and efficiency through internal process changes utilizing SAP products and solutions.
| CMP (24th December 2024) | ₹20.1 |
| Market Cap | ₹49.8 crores |
| 3 year Compounded Sales Growth | 59% |
| 3 year Compounded Growth | 29% |
| Return on Equity (FY24) | 8.97% |
IDBI Bank Ltd
| Metric | Value |
| Market Price (Rs) | 79.7 |
| Market Cap (Rs Cr) | 85,675 |
| Debt-to-Equity | |
| Annual Sales (Rs Cr) | 26,446 |
| ROE (%) | 11.8% |
| ROCE (%) | 6.23% |
Source: Screener.in, Moneycontrol.com (13-01-2025)
Besides an ROCE of 6.23% and ROE of 11.8%, IDBI reported a rise in total income to Rs 8,564.92 crore in the third quarter of the current fiscal, up from Rs 7,514.27 crore in the corresponding period last year, according to a regulatory filing.
The bank’s interest income increased to Rs 7,815.57 crore from Rs 6,540.86 crore in the same quarter of the previous fiscal. Additionally, its Net Interest Income (NII) saw a 23.1% growth, reaching Rs 4,228.22 crore, compared to Rs 3,434.47 crore in Q3 FY24.
GTL Infrastructure Ltd
| Metric | Value |
| Market Price (Rs) | 1.79 |
| Market Cap (Rs Cr) | 2,280 |
| Debt-to-Equity | -0.63 |
| Annual Sales (Rs Cr) | 1,372 |
| ROE (%) | – |
| ROCE (%) | – |
Source: Screener.in, Moneycontrol.com (13-01-2025)
GTL Infrastructure, a prominent telecom tower infrastructure provider, is an essential part of India’s growing digital ecosystem. Despite its capital-intensive operations, it has a debt-to-equity ratio of -0.63, but the company has a strong role in enabling telecom connectivity. With a market capitalization of Rs. 2,280 crore, GTL Infrastructure’s future is tied closely to the expansion of digital services in India. Investors are advised to monitor its efforts to improve financial health while leveraging opportunities in 5G and related technologies.
Sarla Performance Fibers Ltd
| Metric | Value |
| Market Price (Rs) | 87.7 |
| Market Cap (Rs Cr) | 719 |
| Debt-to-Equity | 0.32 |
| Annual Sales (Rs Cr) | 383 |
| ROE (%) | 7.94 % |
| ROCE (%) | 9.51% |
Source: Screener.in, Moneycontrol.com (23-01-2025)
Incorporated in 1993, Sarla Performance Fibers Ltd specializes in manufacturing and exporting polyester and nylon yarns. For the financial year ending March 31, 2024, the company reported revenues of ₹383 crore, a slight decrease from ₹387 crore in the previous year. EBITDA improved to ₹78.79 crore from ₹66.69 crore, and Profit After Tax (PAT) rose to ₹33 crore from ₹21.38 crore. The company maintains an EBITDA margin of 20.6%. Sarla Performance Fibers exports to over 62 countries, with international sales accounting for 51.62% of total revenue in FY24.
Davangere Sugar Company Ltd.
| Metric | Value |
| Market Price (Rs) | 5.06 |
| Market Cap (Rs Cr) | 580 |
| Debt-to-Equity | 0.78 |
| Annual Sales (Rs Cr) | 217 |
| ROE (%) | 3.75% |
| ROCE (%) | 6.86% |
Source: Screener.in, Moneycontrol.com (23-01-2025)
Davangere Sugar Company, a micro-cap stock trading under Rs 10, reported a strong performance in Q3 FY25. Net profit surged 40% YoY to Rs 6.76 crore and 428% QoQ. Revenue grew 86% QoQ to Rs 73.17 crore, while EBITDA rose 14% YoY and 25% QoQ to Rs 18.2 crore.
Margins improved to 24.87% from 20.3% YoY. The company, based in Kukkuwada, Karnataka, has diversified into sustainable power and ethanol. In September 2024, it announced a Rs 400 crore rights issue. The stock, with a 52-week range of Rs 11.35 to Rs 5, has rallied 15% in two weeks.
Steel Exchange India Ltd
| Metric | Value |
| Market Price (Rs) | 9.15 |
| Market Cap (Rs Cr) | 1,119 |
| Debt-to-Equity | 0.84 |
| Annual Sales (Rs Cr) | 1,086 |
| ROE (%) | 1.85 |
| ROCE (%) | 8.16 |
Source: Screener.in, Moneycontrol.com (13-01-2025)
Steel Exchange India Ltd is positioned as a key player in the steel manufacturing sector, with a market capitalization of Rs. 1,119 crore. The company’s debt-to-equity ratio is a low 0.84 through ROE is also just 1.85%. With the government’s focus on infrastructure projects, however, Steel Exchange India is poised to benefit from increased demand for steel and it has a consistent operational performance.
Sarveshwar Foods Ltd
| Metric | Value |
| Market Price (Rs) | 7.80 |
| Market Cap (Rs Cr) | 762 |
| Debt-to-Equity | 1.29 |
| Annual Sales (Rs Cr) | 869 |
| ROE (%) | 7.95% |
| ROCE (%) | 11.8% |
Source: Screener.in, Moneycontrol.com (13-01-2025)
Sarveshwar Foods is a niche player in the basmati rice and organic food markets. With a market capitalization of Rs. 762 crore, the company has carved out a space for itself in India’s growing food export market. Its debt-to-equity ratio of 1.29 reflects financial discipline, while its ROCE of 11.8% underscores its ability to generate returns. Sarveshwar Foods’ focus on high-quality and organic offerings positions it well to capitalize on increasing demand in domestic and international markets.
Lloyds Engineering Works Ltd
| Metric | Value |
| Market Price (Rs) | 79.09 |
| Market Cap (Rs Cr) | 9,765 |
| Debt-to-Equity | 0.15 |
| Annual Sales (Rs Cr) | 624 |
| ROE (%) | 26.2% |
| ROCE (%) | 28.3% |
Source: Screener.in, Moneycontrol.com (23-01-2025)
Founded in 1974, Lloyds Steels Industries specializes in the design, manufacturing, and commissioning of heavy equipment, machinery, and systems for sectors such as Hydrocarbon, Oil & Gas, Steel Plants, Power Plants, Nuclear Plant Boilers, and Turnkey Projects.
The company has an encouraging ROE of 26.2%, an ROCE of 28.3%, and a low debt-to-equity ratio of 0.15. Its net sales for September 2024 reached Rs 212.15 crore, marking a 74.21% increase from Rs 121.78 crore in September 2023. The quarterly net profit for September 2024 stood at Rs 27.95 crore, up 48.75% from Rs 18.79 crore in the same period last year. EBITDA for the quarter was Rs 37.59 crore, reflecting a 48.46% increase from Rs 25.32 crore in September 2023.
Exxaro Tiles
| Metric | Value |
| Market Price (Rs) | 8.74 |
| Market Cap (Rs Cr) | 421 |
| Debt-to-Equity | 0.35 |
| Annual Sales (Rs Cr) | 301 |
| ROE (%) | 1% |
| ROCE (%) | 4.53% |
Source: Screener.in, Moneycontrol.com (13-01-2025)
Between 1 January and 20 January 2025, Exxaro Tiles’ shares rallied 15%. The company, a leading manufacturer of vitrified tiles since 2008, recently announced fundraising plans to support a 15 MW solar power project for its Talod (10 MW) and Padra (5 MW) plants. Its board will meet on 8 February to approve Q3 FY24 results and finalise the fundraising strategy. Exxaro also completed a 1:10 stock split to enhance share liquidity. However, as Exxaro operates in cyclical sectors like real estate and construction, investors should monitor economic trends and sector performance for potential slowdowns.
GVK Power & Infrastructure Ltd
| Metric | Value |
| Market Price (Rs) | 4.33 |
| Market Cap (Rs Cr) | 681 |
| Debt-to-Equity | -3.89 |
| Annual Sales (Rs Cr) | 1,080 |
| ROE (%) | – |
| ROCE (%) | 14.8% |
Source: Screener.in, Moneycontrol.com (13-01-2025)
Another name in the penny stocks list is GVK Power. With a market capitalization of Rs. 681 crore, this a key player in infrastructure development and specializes in offering operation and maintenance services, manpower and consultancy solutions, along with ancillary services, to power plant owners, airports, and infrastructure companies. The company has reduced its debt while its debtor days have improved from 74.5 to 16.6 days. It has an ROCE of 14.8%.
Interestingly, GVK Power reported a significant rise in quarterly net profit, reaching ₹722.04 crore in September 2024, a staggering 1066.46% increase from ₹61.90 crore in September 2023.
The company’s EBITDA also saw growth, standing at ₹383.14 crore in September 2024, up 5.3% compared to ₹363.85 crore in September 2023.
Additionally, GVK Power’s EPS surged to ₹4.57 in September 2024, a substantial jump from ₹0.39 in September 2023.
GACM Technology
| Metric | Value |
| Market Price (Rs) | 0.67 |
| Market Cap (Rs Cr) | 60.6 |
| Annual Sales (Rs Cr) | – |
| ROE (%) | 667 % |
| ROCE (%) | 13.7% |
Source: Screener.in (23-01-2025)
GACM Technologies Limited, one of the penny stocks under 1 rupee, operates in the financial consultancy sector. For the financial year ending 31 March 2024, the company reported total revenue of ₹7.51 crores, an increase from ₹7.24 crores in the previous year. Its Profit After Tax (PAT) improved to ₹1.13 crores from ₹1.10 crores in FY23. The company is supported by its wholly-owned subsidiary, Gayiadi Fintech Private Limited, as it continues to build its footprint in the financial technology space.
Important Factors to Consider When Evaluating Penny Stocks
Assess financial strength: Evaluate the revenue and profitability growth of the companies and always invest in companies that show a consistent earnings growth.
Management team: Evaluate the experience and track record of the company’s management team.
Shareholding pattern: You need to check who are the promoters and investors in the company. Whether the promoter’s stake is increasing or decreasing in the company. Are their shares pledged or not?
Stock price behaviour: Because of their low prices and liquidity, penny stocks are easily manipulated. So, you must evaluate whether the stock is operator-driven or not and has enough trading volume to easily buy or sell the stocks. If the stock price is frequently locked in upper or lower circuit limits, you must be cautious because buying or selling the stock will be extremely difficult. Before investing, check if the price momentum is becoming stronger or not.
Penny stocks are considered risky investments. Investing in penny stocks should only be done after extensive research about the company and its finances. Stocks discussed above are not recommendations. Do your own research before investing.
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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 those stocks whose price in the market is below ₹10 or ₹20 and generally have low market capitalization.
Which penny stocks are best to buy now?
The penny stocks which have shown consistent growth in earnings in the last few years, have a strong management team, and have decent trading volume are best to buy now. They have a higher chance of becoming the best multibagger penny stocks in India in the long term.
Can penny stocks be considered for long term investment?
Penny stocks are considered unsuitable for long-term investments due to their extreme volatility, lack of transparency, and possibility for price manipulation, making them more suitable for short-term investment where rapid price swings can be profited on.
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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.
