If bluechip shares are taken to the cleaners, think about the part which penny shares should have been going by means of.
The preferred class of shares, the penny shares, are additionally dropping traction amongst buyers as a consequence of excessive market volatility.
Penny shares are very risky in nature and will both carry up or create an irreparable dent in your portfolio.
However regardless of having such a poor fame, there are choose few penny shares which might be diamonds within the tough and might grow to be future multibaggers. These penny stocks are fundamentally strong and have an honest monitor document.
Such shares are normally undervalued in comparison with their friends, have good revenue and income development, and have a powerful credit score profile.
Here is a listing of the ten finest penny shares in India which have the potential to ship good returns in the long term.
#1 Pudumjee Paper
Pudumjee Paper is engaged within the enterprise of producing speciality paper.
The corporate additionally manufactures hygiene merchandise comparable to tissues and facial wipes.
It has a pan Indian presence with its sturdy distribution community and a worldwide presence throughout Europe, UAE, and South East Asia.
Within the final three years, the corporate’s income declined barely as a result of pandemic. Nevertheless, the online revenue has grown at a compound annual development charge (CAGR) of 21.6% throughout the identical interval.
In addition to this, it additionally has a powerful monetary threat profile. As of 31 March 2021, its debt-to-equity ratio stood at 0.1x, and the curiosity protection ratio was 6.4 instances.
In comparison with its friends, shares of Pudumjee Paper are buying and selling at a reduction. The corporate’s value to earnings (P/E) ratio at the moment stands at 6.9x, whereas the trade common is 14.19x.
The corporate’s income is predicted to go up within the monetary 12 months 2023 on account of the reopening of colleges and rising demand for packaged items.
#2 Worldwide Conveyors
Worldwide Conveyors is engaged within the enterprise of producing PVC conveyor belts.
The corporate’s belts discover use in coal, potassium, and cement transportation in underground mines.
It additionally trades conveyor belts, becoming and equipment. In addition to this, the corporate additionally has 5 windmills with an put in capability of 11 million kilowatt hours (kwh).
The corporate is likely one of the key gamers within the world conveyor belt market and has a reputed shopper base inside and outdoors India.
A few of its purchasers embrace Tata Metal, Coal India, Rosebud, BeltTech, and Mosaic.
Over the past three years, the corporate’s income has grown at a CAGR of 23.7% as a consequence of development in exports. The web revenue additionally grew at a CAGR of 42.8% throughout the identical time.
Being a debt free firm, it enjoys a powerful threat profile. Presently, the corporate’s shares are buying and selling at a P/E of 28.6x and a value to ebook worth (P/BV) of two.94x.
A powerful order ebook and excessive operational effectivity are anticipated to drive the corporate’s income and revenue within the subsequent fiscal 12 months.
#3 Menon Piston
Menon Pistons is an auto ancillary firm that manufactures auto elements comparable to pistons, auto shafts for industrial automobiles, and gudgeon pins.
The corporate’s merchandise are utilized by unique tools producers comparable to Cummins India, Eicher Motors, Tata Motors, and Maruti Suzuki.
It additionally earns income from aftermarket gross sales by promoting on to clients.
Within the final three years, the income and revenue of the corporate declined barely as a result of pandemic.
Menon Pistons is a debt free firm and has a wholesome curiosity protection ratio of 60.4 instances within the monetary 12 months 2021.
In comparison with its friends, the shares of Menon Piston are buying and selling at a reduction. The P/E ratio of the corporate at the moment stands at 13.5x, and the trade common is 24.9x.
Going ahead, a rise in working capability is predicted to drive the corporate’s income.
#4 Geojit Monetary Companies
Geojit is a monetary companies firm that gives a variety of economic companies, together with on-line broking, advisory, portfolio administration companies, monetary product distribution, and margin buying and selling.
The corporate additionally gives software program growth and upkeep companies.
It has a presence throughout India by means of 470 department places of work serving over 1 m purchasers. The corporate additionally arrange places of work in UAE, Oman, Kuwait, and Bahrain primarily to supply monetary companies to non-resident Indians.
Within the final three years, Geojit Monetary Companies’ income has grown at a wholesome CAGR of 11.2%, pushed by development within the fairness enterprise.
The web revenue additionally grew at a wholesome CAGR of 60.1% throughout the identical time. Add to that, Geojit is a debt free firm.
The corporate’s shares are buying and selling at par with the trade common of 8.5x.
Regardless of being current in a aggressive trade, it has a longtime market share within the fairness broking section, which can drive the corporate’s revenues within the medium time period.
#5 Jagran Prakashan
Jagran Prakashan is a media conglomerate.
It’s primarily into printing and publishing newspapers and magazines. In the previous couple of years, the corporate additionally forayed into FM radio, promotional advertising, occasion administration, and outside and digital promoting.
Jagran Prakashan operates 34 printing services and has a readership of 84 m readers. It additionally has ten publications, 39 radio stations, and 15 digital portals throughout ten languages.
Among the firm’s well-known manufacturers are Dainik Jagran, Mid-day, and Radio Metropolis, amongst others.
The income and web revenue of Jagran declined as a result of pandemic however the firm was fast sufficient to bounce again.
It has a powerful credit score profile. Within the monetary 12 months 2021, the debt-to-equity ratio stood at 0.1x, and the curiosity protection ratio was 4.2 instances.
Shares of the corporate are at the moment buying and selling at a PE ratio of seven.8x, which is far beneath the trade common of 17.2x.
With the financial system again on monitor, the commercial income is predicted to extend within the subsequent fiscal 12 months.
#6 Ador Fontech
Ador Fontech manufactures welding electrodes, welding alloys, ceramic pipes and blends, pulley lagging mats and different welding tools.
It additionally repairs very important equipment for core sectors like energy, mining, metal, and petroleum refineries.
The corporate has two manufacturing vegetation and one reclamation centre in India, the place it manufactures and repairs welding merchandise for its purchasers.
The corporate was affected by the pandemic like each different firm.
Nevertheless, within the current quarterly outcomes, its income grew at 25.9% year-on-year (YoY). The web revenue additionally grew at a wholesome charge of 51.5% (YoY).
The corporate’s debt metrics are additionally fairly sturdy, with zero debt and an curiosity protection ratio of twenty-two.9 instances within the monetary 12 months 2021.
S hares of Ador Fontech are at the moment buying and selling at a P/E of 10.9x, whereas the trade common is 39.8x. This exhibits the shares are undervalued when in comparison with the trade.
Going ahead, the corporate’s enlargement plans will enhance its working capability, therefore offering a chance to develop its income.
#7 Munjal Showa
Munjal Showa is an auto ancillary firm that manufactures auto elements for 2 and four-wheeler automobiles.
It’s established as a collaboration between Hero Group and Showa Company of Japan.
Munjal Showa at the moment has three manufacturing services in India and derives 100% of its income from Indian markets.
Munjal’s income and web income declined as a result of pandemic. Nevertheless, because the financial system opened up, the income grew at a wholesome tempo.
The corporate is debt-free, and its curiosity protection ratio within the monetary 12 months stood at 103.1 instances.
Munjal Showa’s shares are buying and selling at a P/E of 35.4x and P/BV of 0.6x.
Going ahead, financial restoration and pent-up demand for vehicles from the pandemic will drive Munjal’s income .
#8 Gujarat Pipavav Port (GPPL)
Gujarat Pipavav Port is India’s first personal sector port. It connects India with the US, Europe, the Center East, and Africa to the west and the far east on the opposite aspect.
It handles 4 forms of cargo, specifically container, dry bulk, liquid bulk, roll on and roll off ships.
Gujarat Pipavav Port has entry to fashionable expertise and operational know-how of its guardian firm, APM Terminals, one of many world’s largest port and terminal operators.
Within the final three years, the corporate’s income has grown at a CAGR of 1.2%, led by reasonable development in operations.
The web revenue additionally grew at a CAGR of 1.4% throughout the identical interval.
Gujarat Pipavav is a debt-free firm and has an curiosity protection ratio of 52.2 instances within the monetary 12 months 2021.
The corporate’s P/E and P/BV present stand at 21.8x and 1.8x, respectively.
Going ahead, the corporate’s aggressive tariff charges and strategic location are anticipated to drive the income and revenue margins within the medium time period.
#9 Rubfila Worldwide
Rubfila Worldwide is considered one of India’s largest producers of warmth resistant rubber threads.
It is usually the one Indian firm that producers talcum and silicon-coated rubber threads.
The corporate’s merchandise are utilized in toys, bungee leaping cords, medical webbing, and meat packaging, amongst others.
Aside from a powerful home presence, it additionally exports its merchandise to over 30 international locations.
Within the final three years, Rubfila Worldwide’s income has grown at a CAGR of 14.3% as a result of excessive demand for rubber threads.
The web revenue additionally has grown at a CAGR of 25.2% throughout the identical interval.
Being a debt free firm, it has numerous scope for counting on debt for enlargement. As of the monetary 12 months 2021, it has a wholesome curiosity protection ratio of 178.4 instances.
Shares of Rubfila Worldwide are at the moment buying and selling at a P/E of 10.1x, whereas the trade common is eighteen.1x.
#10 Marksans Pharma
Marksans Pharma is engaged in formulations of pharmaceutical merchandise.
It focuses on over-the-counter and pharmaceuticals that discover use in a number of fields comparable to oncology, gastroenterology, gynaecology, antidiabetic, antibiotics, and ache administration.
The corporate has a diversified product portfolio with over 80 merchandise throughout ten therapeutic segments.
Aside from a powerful home presence, it additionally exports its merchandise to over 25 international locations.
Marksans Pharma is current throughout the worth chain from R&D to the distribution of medicines to finish clients.
It’s planning to combine backwards into lively pharmaceutical components (API) manufacturing for captive consumption.
Over time, the corporate expanded by buying corporations throughout the globe.
Within the final three years, Marksans Pharma’s income has grown at a CAGR of 11.2%, pushed by greater demand.
The web revenue additionally grew at a CAGR of 43.7% throughout the identical time.
Aside from a powerful revenue development, it has zero debt on its books, and its curiosity protection ratio within the monetary 12 months 2021 stood at 38.8 instances.
In comparison with its friends, shares of the corporate are buying and selling a lot beneath the trade common of 23.6x. The corporate’s P/E ratio is 8.5x.
Going ahead, new product launches are anticipated to drive the income within the subsequent fiscal.
Why it’s best to put money into one of the best penny shares in India
Penny shares look very engaging as a consequence of their low costs. Buyers and merchants usually use them to take a position within the inventory market.
In addition to this, penny shares are very risky. Even a small piece of reports will result in a giant bounce or fall within the share value. Subsequently, it’s recommended that you just follow warning whereas investing in penny stocks.
Select solely these shares which might be essentially sturdy. In different phrases, shares which have steady income and revenue development, good credit score profile, and are buying and selling at a reduction to their friends.
Such shares are comparatively much less risky to market corrections and have excessive development potential in the long term.
Choosing the proper penny inventory isn’t any rocket science. You’ll be able to select one of the best shares in your portfolio by practising just a little warning.
Glad Investing!
Disclaimer: This text is for info functions solely. It isn’t a inventory suggestion and shouldn’t be handled as such.
This text is syndicated from Equitymaster.com
Supply: Live Mint