What are multi-bagger stocks?

Multibagger stocks are shares that generate returns multiple times their initial investment, often due to strong growth potential, solid fundamentals, and market expansion.

How risky are penny stocks?

Penny stocks are highly risky due to low liquidity, high volatility, limited financial transparency, and susceptibility to price manipulation.

What are blue chip stocks?

Blue-chip stocks are shares of large, financially stable companies with a strong track record of performance and reliability.

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NSE Penny Stocks Under 5 Rs To Know This Year

Archana Chettiar
March 3, 2025

One important principle of building a stock portfolio is maintaining balanced diversification. While large-cap and blue-chip stocks generally bring stability, mid-cap, and small-cap stocks are added to increase the chances of potential growth and higher gains. Penny stocks are another category of stocks considered for higher growth potential.

What are penny stocks? These are low-priced stocks, usually trading below Rs.50 per share, with a small market capitalization. These stocks are often illiquid and carry high investment risks due to limited information disclosure, large bid-ask spreads, and lower trading volumes. While they require minimal capital, they are highly speculative and prone to sudden price fluctuations, making them attractive to traders seeking high-risk, high-reward opportunities.

This article will examine the top penny stocks under 5 Rs and understand what factors to consider when investing in the top 10 shares under 5 Rs.

Top NSE Penny Stocks Under Rs.5:

Based on the December 2024 quarter’s financial results, here are the top penny stocks under Rs.5 as of 18th February 2025-

Name	Price Rs.	Mar Cap Rs.Cr.	NP Qtr Rs.Cr.	NP 12M Rs.Cr.	Net worth Rs.Cr.	P/E	Ind PE	ROCE %	1Yr return %
Nandan Denim	4.04	582.36	6.58	49.96	601.54	11.65	22.72	11.46	2.93
Harshil Agrotech	4.27	303.68	5.48	11.23	61.12	27.05	29.82	16.41	777.27
PMC Fincorp	2.47	175.88	3.79	18.88	123.53	9.32	19.53	10.68	-5.93
Franklin Indust.	2.21	63.91	3.29	18.59	63	3.45	29.82	119.6	15.84
Shah Metacorp	3.45	201.78	3	30.21	158.58	22.15	24.23	4.94	-2.6
Godha Cabcon	0.82	76.77	2.79	5.16	94.35	14.88	27.14	1.38	9.33
Pro Fin Capital	4.5	143.1	1.58	1.81	32.64	79.06	19.53	3.75	182.69

Source: Screener and Money Control

Overview of Top Penny Stocks Under Rs.5:

Nandan Denim Limited:

Nandan Denim Ltd, incorporated in 1994, is part of the Ahmedabad-based Chiripal Group and specializes in manufacturing and distributing denim fabric, dyed yarn, cotton fabric, and shirting materials. The company is ISO 17050-1 and OEKO-TEX certified, supplying its products to domestic and international markets. With a vertically integrated production process and an in-house creative design studio, Nandan Denim focuses on innovation and expanding its global footprint.

The company has a fabric production capacity of 110 million meters per annum and exports to over 15 countries. It serves various international and domestic brands, leveraging its extensive dealer-distribution network. In FY2024, Nandan Denim reported revenue of ₹2,010 crore, with a profit after tax of ₹44.97 crore and a PAT margin of 2.24%. The company’s net profit significantly increased from ₹0.53 crore in FY2023. Its earnings per share (EPS) stood at ₹0.31 at the end of FY24. Source: Annual Report

Harshil Agrotech Limited:

Harshil Agrotech Ltd (HAL), incorporated in 1972, operates in the agriculture and commodities sector. The company prepares, manufactures, markets, trades, imports, and exports agricultural food products, including spices, oil seeds, grains, vegetables, herbs, and pickles. Previously known as Mirchi Technologies Ltd, HAL leverages agricultural and farming activities to operate its business.

The company has shown significant financial growth in recent quarters. In December 2024, net sales reached ₹25.73 crore, marking a 713.67% increase from ₹3.16 crore in December 2023. Quarterly net profit rose sharply to ₹5.48 crore, up 2599.66% from ₹0.20 crore in the previous year. EBITDA for the quarter stood at ₹5.38 crore, reflecting a 2239.13% growth. Additionally, HAL has maintained a healthy return on capital employed (ROCE) of 22.86% over the past three years and remains virtually debt-free.

Source: Money Control

PMC Fincorp Limited:

PMC Fincorp Ltd, incorporated in 1985, operates as a Non-Banking Financial Company (NBFC) registered with the Reserve Bank of India. Initially established to provide financial services, the company went public in 1988 and has since expanded its operations in corporate and personal finance, debt syndication, private placement, financial product distribution, and stock market investments. It does not accept public deposits and is classified as a Non-Systemically Important NBFC.

The company has been listed on the Bombay Stock Exchange since 2012. Over the years, it has built a presence in lending, mainly working with SMEs and corporate clients to provide structured financial solutions. For FY2024, PMC Fincorp Ltd reported a revenue of ₹15.66 crore and a net profit of ₹11.34 crore, with a net worth of ₹115.17 crore. The company continues to focus on financial services and investment activities, adapting to evolving market conditions while maintaining regulatory compliance.

Source: Annual Report

Franklin Industries Limited:

Franklin Industries Limited is engaged in contract farming and agricultural production, focusing on sustainable farming practices while maintaining operational profitability. The company collaborates with farmers through contractual agreements, ensuring crop cultivation aligns with market demand and business objectives.

The company operates a contract manufacturing model by leasing agricultural land and cultivating cucumber, onion, and castor crops. A portion of the yield is shared with contract farmers, contributing to the local farming community. In FY 2023-24, Franklin Industries Limited reported a revenue of ₹51 crore, a significant increase from ₹20.52 crore in the previous fiscal year. The net profit after tax rose to ₹10.46 crore from ₹2.14 lakh in FY 2022-23.

Source: Annual Report

Shah Metacorp Limited:

Shah Metacorp Limited, formerly known as Gyscoal Alloys Limited, is engaged in the manufacturing, exporting, and supplying of stainless steel and mild steel products. Incorporated in 1999 as Shreenath Mineral Metal Private Limited, the company initially operated in the trading of iron and steel scraps, billets, and long steel products.

Over the years, it expanded its operations and rebranded to Gyscoal Alloys Limited before adopting its current name, Shah Metacorp Limited, in June 2023. The company operates a manufacturing facility in Kukarwadap with an annual production capacity of 18,000 MTPA, covering stainless steel grades from the 200 series to the 400 series. Its portfolio includes stainless steel bars and other long products catering to various industrial applications.

For FY2024, the company reported a total revenue of Rs.9,622.48 Lakhs, marking a 105.3% increase from Rs.4,687.92 Lakhs in FY2023. Profit After Tax (PAT) grew by 154.3% from Rs.165.37 Lakhs to Rs. 420.59 Lakhs. The company maintains a debt-free position without borrowings from banks or financial institutions. Source: Annual Report

Know More:  SEBI Registered investment advisory |  Stock investment advisory

Factors To Consider Before Investing In Penny Stocks:

Penny stocks are often sought after especially for investing in multi-bagger penny stocks. But to select the right company, you must consider the following factors before investing-

Assess the Company’s Financial Health

Review financial statements to determine profitability, debt levels, and overall stability. A strong balance sheet and consistent revenue growth indicate a company with potential, while losses or excessive debt may signal financial distress.

Analyze Trading Volume

Low trading volume can make buying or selling shares at desired prices difficult, leading to liquidity issues. A higher-volume stock generally indicates more substantial market interest, reducing the risk of being unable to exit a position when needed.

Monitor Stock Price Movements

Penny stocks are highly volatile. Using charting tools to analyze price trends, support levels, and resistance points helps identify favorable entry and exit points, reducing the risk of overpaying for shares.

Check Company News and Developments

Research recent press releases, product launches, or strategic partnerships. Positive developments can drive stock prices, while negative news may lead to a sharp decline. Examining management’s past decisions and plans provides further insight into the company’s growth potential.

Avoid Companies With Low Transparency

Many penny stocks lack analyst coverage or extensive regulatory oversight. Verify if the company provides detailed reports, shareholder communications, and transparent financial disclosures. Limited information can indicate higher risk and potential red flags.

Diversify and Invest Cautiously

Investing in multiple penny stocks across different sectors can spread risk. Avoid allocating significant capital to a single stock, and ensure investments align with personal risk tolerance.

Bottomline:

Investment in penny stocks can be lucrative but comes with significant risks. Conduct thorough research, assess financial stability, and monitor trading volumes before deciding. Look for transparent companies with growth potential and avoid low-liquidity stocks. Using stock market advisory services can provide valuable insights to navigate this high-risk segment effectively. Diversify investments and approach penny stocks cautiously to balance potential gains with market uncertainties.

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 & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

FAQs

What are multi-bagger stocks?
Multibagger stocks are shares that generate returns multiple times their initial investment, often due to strong growth potential, solid fundamentals, and market expansion.
How risky are penny stocks?
Penny stocks are highly risky due to low liquidity, high volatility, limited financial transparency, and susceptibility to price manipulation.
What are blue chip stocks?
Blue-chip stocks are shares of large, financially stable companies with a strong track record of performance and reliability.

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Archana Chettiar

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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.