For these new to the sport, there’s no common definition for penny shares. Typically, fairness shares that commerce for lower than ₹100 per unit are referred to as penny shares.
The craze actually stems from the truth that traders should purchase giant chunks of those shares at low costs.
Second, there may be super development potential. Mainly, excessive returns within the quick time period.
Furthermore, penny shares contribute in the direction of the diversification of your portfolio.
Certain, there’s danger concerned, similar to any market-linked monetary product. But when rigorously chosen, the rewards far outweigh the dangers.
So, in case you have a high-risk urge for food, right here’s a listing of high 5 zero debt penny shares for 2022 with good profitability.
#1 Singer India Ltd.
Singer India (SIL) is 59% owned by RHBV, an erstwhile wholly owned step-down subsidiary of Singer Asia. Retail Holdings NV, Curacao (RHNV) owns oblique fairness of 54.1% and is the last word father or mother entity right here.
SIL is likely one of the most recognised and iconic home home equipment manufacturers within the area. Working in India since 1977, it continues to mirror a robust model presence and is seen quickly diversifying within the house home equipment house with an asset-light enterprise mannequin.
Though the father or mother firm lowered its stake in December 2020, the enterprise profile of SIL remained unaffected.
Regardless of the diversification within the product portfolio of SIL, the enterprise derives the majority of its income from the stitching machine enterprise. The phase contributed 64% to the whole income in monetary yr 2021 in opposition to 63% in fiscal yr 2020 and 70% in 2019.
With a producing facility in Jammu, the corporate continues to assemble stitching machines and residential home equipment in India supported by outsourcing back-to-back guarantee with distributors to service main defects.
This has helped the corporate keep a wholesome Return on Capital Employed [ROCE] of 21.2% over the previous 3 years. In monetary yr 2021, the ROCE was greater than 17%, whereas the revenue margin was simply 3 – 5% over the 4 fiscals by means of 2021.
The asset-light mannequin has saved the corporate’s capital construction wholesome. It lowered debt considerably by ₹173.6 m. In reality, present financials present the corporate has achieved a zero debt to fairness ratio.
So, if you’re contemplating investing in debt free penny shares, Singer India with product sales of ₹4.1 bn and revenue development of 30.7% prior to now yr, must be in your watchlist in 2022.
#2 Railtel Company of India Ltd.
Because of the current correction, Railtel Corp is now thought of a penny inventory, which trades under ₹100.
Integrated in 2000 for offering telecom-related companies to the Indian Railways, Railtel Company of India – is a Mini Ratna (Class-I) PSU that operates throughout two main segments – telecom and tasks.
With majority possession by the federal government of India beneath the Ministry of Railways, the corporate comes with a robust parentage. Railtel has the potential to execute any connectivity-related tasks for the Railways.
Railtel has constantly elevated its footprint within the house by offering telecom infrastructure and different associated companies to a number of public-sector enterprises and personal gamers.
Within the final 5 years, Railtel has proven good income development of 30.9%. It has maintained common working margins of 28.7%.
That is largely as a result of Railtel has Proper of Means (RoW) exclusivity that permits it to put fibre to facilitate telecom companies alongside tracks.
With its fibre community of roughly 60,000 km, the corporate continues to obtain giant orders from the Indian Railways. Its product sales have been ₹13.37 bn and PAT was ₹1.40 bn in monetary yr 2021.
The corporate has been constantly paying dividends within the final 3 years with a median dividend payout of 13%.
Within the absence of exterior debt and availability of wholesome free money balances, Railtel boasts of robust monetary flexibility and sturdy liquidity.
Within the lately introduced ‘Fortune India Subsequent 500 record of 12 months 2022, Railtel jumped 67 positions to rank 124th among the many high 500 midsized firms in India.
Due to this fact, if you’re trying to diversify your portfolio into the telecom infrastructure house, then Railtel Company of India – is a robust contender for zero debt penny shares for 2022.
#3 Jamna Auto Industries Ltd.
Though the Indian industrial car trade has been beneath stress for a while, specialists predict the phase will hit excessive double-digit development in monetary yr 2022.
The much-awaited scrappage coverage and the potential to cut back air pollution, value of imports of oil and uncooked supplies are anticipated to drive sale volumes.
This brings us to Jamna Auto Industries, the third on our record of debt free penny shares.
Jamna Auto Industries is a market chief with over six a long time of expertise within the home M&HCV OEM phase. Its product sales have been ₹10.5 bn in fiscal 2021.
With a dominant share of its enterprise coming from behemoths like Tata Motors and Ashok Leyland, the corporate has been capable of keep a robust steadiness sheet regardless of turbulent instances within the current previous.
A trusted identify in industrial autos’ suspension manufacturing, Jamna Auto provides a full vary of suspension options. As a part of their diversification coverage, the corporate established a robust after-market provide a whole vary of spare elements. This helped its gross sales to regularly enhance from 9% in fiscal yr 2011 to 29% in fiscal 2020.
Commensurate with its enlargement technique, Jamna Auto Industries arrange an in-house analysis & improvement facility. This assisted the corporate to spearhead its presence in new technology merchandise strains.
With a sustained scale-up dedicated to long run enterprise development, Jamna Auto reported a PAT of ₹767.2 m in fiscal 2021.
It actively labored in the direction of minimising debt and is a zero-debt firm at the moment.
The corporate’s beneficial value construction supplied monetary resilience that led to a declaration of an fairness dividend of 75%. This quantities to a dividend yield of 0.8% on the present worth.
For fiscal 2022, the corporate has already paid out a dividend of ₹0.5 per share.
#4 Ador Fontech Ltd.
Again-to-back lockdowns because of the Covid-19 disaster resulted in appreciable disruptions within the building trade. However the world welding electrodes market is on the cusp of a robust revival.
Backed by rising demand, the market is projected to exhibit a CAGR of 4.3% and is estimated to achieve US$ 27.22 bn by 2027.
Among the key components propelling the development are the introduction of cutting-edge applied sciences in welding automation together with the event of tailormade and revolutionary designs that may be utilized throughout a number of core industries.
Indian producers extensively use welding to hitch metals and alloys. This places Ador Fontech, considered one of India’s main restore welding corporations as a robust contender within the record of most sought-after penny shares for 2022.
Established in 1974 and spearheaded by a seasoned administration crew, Ador Fontech is an organization that positioned loads of emphasis on sustaining its debt free standing regardless of the pandemic.
This was made attainable as the corporate put loads of significance on collections from debtors proper from the inception of the Covid-19 disaster. This translated into making well timed funds to collectors and serving to Ador to handle its working capital effectively.
With monetary prudence, the corporate might keep a optimistic revenue trajectory at 12.2%.
The inventory provides a dividend yield of three.1%. The PAT of ₹127.1 m got here from its robust foothold within the merchandise, companies and options that caters to the restore phase i.e. life enhancement of commercial elements.
Behind a robust steadiness sheet, Ador Fontech recorded product sales of ₹1.5 bn in monetary yr 2021 with an environment friendly money conversion cycle of 37.1 days. Though revenues fell 0.9% over the previous 3 years, the corporate might keep a wholesome liquidity place with a present ratio of 4.03.
Ador Fontech is poised for long run development with the corporate actively investing in updating and upgrading its welding methods and supplies. That is an extra income stream for the corporate.
It is a penny inventory that must be in your 2022 funding watchlist.
#5 Rubfila Worldwide Ltd.
Working since 1994, Rubfila Worldwide is promoted by Rubpro Sdn Bhd, Malaysia and Kerala State Industrial Improvement Company. The corporate is reputed to be the biggest rubber thread producer within the nation.
Rubfila Worldwide declared a turnover of ₹2.7 bn, the very best ever within the historical past of the corporate in monetary yr 2021. This was a 25.2% soar from 2020.
The export enterprise noticed a 75% spike. The reported earnings per share (EPS) of 6.5 for monetary yr 2021 noticed an 83.5% improve in comparison with 2020.
The corporate’s annual income development of 23.9% outperformed its 3 yr CAGR of 14%.
A PAT of ₹1,404.1 m translated right into a revenue development of 101%. The inventory’s dividend yield is 1.4%.
Rubfila has been on a gentle development path and has labored in the direction of increasing its capability over the past 8 years.
In step with its enlargement technique the corporate lately introduced the graduation of business manufacturing of a brand new line at its unit at Madathukulam in Tamil Nadu on 8 March 2022. This triggered a inventory worth achieve of two% on the identical day.
The numbers bear proof that the demand for latex merchandise have been on the rise each domestically and worldwide. This is sufficient to safe a spot for Rubfila Worldwide as a debt free penny inventory to be careful for in 2022.
The Means Ahead
With over 1,000 penny shares competing to your consideration, how do you separate the boys from the boys?
Particular person analysis is a given. Nevertheless it have to be paired with a strong framework for shortlisting penny shares.
Try the steadiness sheet, take a look at the debt to fairness ratio and see if the corporate has a monitor file of constant dividend payouts for the final 5 years.
Penny shares is usually a nice instrument to start your funding journey. You don’t want a considerable amount of capital to speculate. You can begin small and but make a considerable revenue.
However bear in mind. Even debt free penny shares are extremely unstable. You need to solely play the sport if you happen to can deal with excessive danger. Every thing is determined by the fitting choice that may doubtlessly ship long run returns.
Be ready to stay it out.
To know extra, try Co-head of Analysis at Equitymaster, Rahul Shah’s video the place he zeroes in on the right penny stocks to watch out for in 2022.
Blissful Penny Inventory Investing!
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