Penny stocks are shares of smaller companies on stock exchanges, usually priced under INR 10. Their trading frequency is low, and their returns hinge on abrupt market fluctuations.
Due to low liquidity, penny stocks pose risks. You might buy low but struggle to sell. Delisting affects some, resulting in losses. There’s no assurance of high returns.
Investors must research and diversify when dealing with penny stocks. Forbes Advisor India studied the top 50 penny stocks on BSE and NSE, focusing on those trading around INR 30 yearly.
Suzlon Energy Ltd
Suzlon Energy demonstrates excellence through improved finances, a robust order pipeline, and elevated stock value propelled by the Government’s emphasis on renewable energy. Moreover, Suzlon boasts a portfolio of 20 GW in wind energy installations across India.
ICICI Securities and other brokerages see brighter industry prospects favoring Suzlon. Government policies like closed bidding and annual 10GW wind auctions could boost the company.
Recently, the stock reached a five-year peak, with potential for more growth, making it an appealing Q3 penny stock investment.
South Indian Bank
South Indian Bank Remains as a promising contender in the penny stock arena, with the potential for a renewed upturn in 2023. This optimism revolves around two key factors:
Firstly, the bank, operating in the private sector, has consistently expanded. its net interest margin every quarter. Secondly, the bank’s sequential profit growth paints a positive picture. As the bank attracts a growing clientele, especially non-resident Indians, experts predict that its foundational strengths will strengthen.
Murali Ramakrishnan’s sudden departure as the CEO and MD of South Indian Bank during a turnaround phase raised uncertainties about the bank’s sustained growth path. Although the stock took a temporary hit due to this, market experts remain largely confident in the bank’s strong growth potential over the long run. The future trajectory hinges on the bank’s effectiveness in reducing bad loans and expanding its business, catering to both domestic and NRI customers.
Reliance Power
Reliance Power is intriguing, with volatile swings this year and potential for Q3 growth. March 2023 saw INR 257 cr net profit after consecutive losses.
The company settled Rosa, UP subsidiary’s INR 925 cr debt using Varde Partners’ raised debt (up to INR 1,200 cr). Reports suggest INR 1,260 cr debt settlement offer to Vidarbha Industries Power, aiming for financial improvement.
UCO Bank
UCO Bank proves a worthy penny stock in 2023, showcasing solid net interest margin growth and rising pre-tax profits. Indian public sector banks’ resilience boosts UCO Bank’s credibility, with gradual balance sheet expansion.
UCO Bank demonstrates notably lower credit costs and bad loan provisions, while shares surged over 100% since 2022. Potential for further gains exists, making it an opportune time to consider UCO Bank in your portfolio, supported by strong market analyst endorsements.
Vodafone Idea
Vodafone Idea, a collaboration between UK’s Vodafone Plc and India’s Aditya Birla Group, emerges as a prime Q3 penny stock option. Funding anticipation and progress uncertainty define its state.
Although sovereign support exists, heavy debt hampers Vodafone Idea since last year. Despite challenges, the company’s robust fundamentals offer hope for survival amidst telecom competition.
Bank of Maharashtra
Bank of Maharashtra’s stock aligns with other PSU bank stocks within Nifty PSU Bank Index, known for outperformance with 12 PSU bank stocks.
What sets the Bank of Maharashtra apart is robust fundamentals, substantial credit and deposit growth, and sovereign guarantee reassurance. Quarterly NPAs show a decline, favoring its position. In the past year, stock prices doubled, and 2023 holds further potential.
Indian Railway Finance Corp
Indian Railway Finance Corp remains stable with government backing and being its major client. In the business of funding railway assets, IRFC went public in 2021.
IRFC’s appeal as a Q3 penny stock stems from its robust growth; net profit rose almost 5% to INR 6,337 cr. With over 65% gains in a year and strong fundamentals, it has the potential as a long-term multi-bagger penny stock.
Orient Green Power Company
Orient Green Power, an unusual stock, surged in returns for Three years. Despite high debt-to-equity, interest payments were managed. Return on equity is low, while the price-to-earnings ratio exceeds peers’.
Annual net profit narrowed to INR 19 cr from INR 32.35 cr YoY. Expansion plans beyond India announced. The market lacks conviction, yet the stock performs, making it a cautious Q3 penny stock consideration.
PC Jeweller
PC Jeweller’s unexpected slide into penny stock territory, from its stature as a large jewelry brand, resulted from troubles spanning 2018 to 2021. Founder and family faced insider trading allegations, alongside legal disputes with the State Bank of India and other banks due to loan issues.
Despite mounting debt, a ray of hope emerges as FY23 witnesses improved quarterly sales: Q1 at INR 547.42 cr, Q2 at 897.58 cr, and Q3 at 854.31 cr. Gold price surge dampens physical gold demand, yet PC Jeweller’s strategic timing during wedding and festival seasons could boost sales.
A World Gold Council report confirms these periods ignite jewelry demand. However, investing in PC Jeweller requires consideration of underlying risks.
Indian Overseas Bank
Consider Indian Overseas Bank, a public sector bank, an intriguing penny stock. Its strong fundamentals shine: decreasing gross NPAs, rising EPS, growing profit after tax, and increased total income.
IOB reduces bad loan provisions quarterly, raising hopes for continued multi-bagger performance akin to 2022’s investor experience.
Note: All stock prices are updated as on July 13, 2023.
