The 10 Best Penny Stocks in India to Add to Your Watchlist

The 10 Best Penny Stocks in India to Add to Your Watchlist – Investors have had a really bad year so far in 2022.

The 10 Best Penny Stocks in India to Add to Your WatchlistThe 10 Best Penny Stocks in India to Add to Your Watchlist

The benchmark BSE Sensex and Nifty 50 indexes have decreased by more than 8% so far this year.

Even bluechip companies like Titan, Wipro, and Infosys have seen a significant decline and are now trading around their 52-week lows.

Imagine the period that penny stocks had to go through if bluechip stocks were taken advantage of.

Due to the significant market volatility, investors are also losing interest in the most popular stock category, penny stocks.

Penny stocks have a high degree of volatility and have the potential to boost your portfolio or cause irreparable damage.

However, despite having such a bad image, there are a select few penny stocks that are undiscovered gems with the potential to become multibaggers in the future. These penny stocks have a respectable track record and solid fundamentals.

These companies often have a great credit profile, excellent profit and sales growth, and are inexpensive in comparison to their rivals.

Here is a list of the top 10 Indian penny stocks that have the potential to provide solid profits over time.

1. Pudumjee Paper

Pudumjee Paper manufactures specialty paper as a company.

The business also produces sanitary items including tissues and face wipes.

With a robust distribution network, it is well-known across all of India as well as in Europe, the United Arab Emirates, and South East Asia.

The epidemic caused a modest reduction in the company’s sales during the last three years. However, throughout the same time period, the net profit increased at a compound annual growth rate (CAGR) of 21.6 percent.

In addition, it has a high financial risk profile. Its debt-to-equity ratio was 0.1x as of March 31, 2021, and its interest coverage ratio was 6.4 times.

Shares of Pudumjee Paper are now trading at a discount to its competitors. The price to earnings (P/E) ratio for the firm is now 6.9x, compared to the industry average of 14.19x.

Due to the reopening of schools and the rising demand for packaged products, the company’s income is anticipated to increase in the fiscal year 2023.

2. Worldwide Conveyors

PVC conveyor belt production is a business operated by International Conveyors.

The company’s belts are used in underground mines to deliver cement, potassium, and coal.

Conveyor belts, fittings, and accessories are also traded. In addition, the business has five wind turbines with an installed capacity of 11 million kilowatt hours (kwh).

The business has a reputable clientele both within and outside of India and is one of the major participants in the international conveyor belt industry.

Tata Steel, Coal India, Rosebud, BeltTech, and Mosaic are a some of its customers.

Due to an increase in exports during the previous three years, the company’s revenue increased at a CAGR of 23.7 percent. During the same year, the net profit also increased at a CAGR of 42.8 percent.

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Due to its debt-free status, the firm has a favourable risk profile. The company’s shares are now selling at a price to earnings ratio (P/E) of 28.6x and a price to book value (P/BV) of 2.94x.

The company’s sales and profit are anticipated to be driven by a healthy order book and good operational efficiency in the next fiscal year.

3. Piston Menon

Menon Pistons is an auto accessory business that produces automotive parts such gudgeon pins, auto shafts for commercial cars, and pistons.

Original equipment producers including Cummins India, Eicher Motors, Tata Motors, and Maruti Suzuki employ the company’s products.

It also makes money by selling directly to consumers in the aftermarket.

Due to the pandemic, the company’s income and profit somewhat decreased during the last three years.

In the fiscal year 2021, Menon Pistons will have no debt and an excellent interest coverage ratio of 60.4 times.

The shares of Menon Piston are now trading at a discount to those of its competitors. The company’s P/E ratio is at 13.5x, while the industry average is 24.9x.

Revenue for the firm is anticipated to be driven by an expansion in operational capacity in the future.

4. Financial Services by Geojit

Online broking, advice, portfolio management, financial product distribution, and margin trading are just a few of the financial services that Geojit provides.

The business also provides software maintenance and development services.

Through 470 branch offices, it is present across India and serves over 1 million customers. In order to provide financial services to Indians who are not residents of those countries, the business has opened branches in the UAE, Oman, Kuwait, and Bahrain.

Revenue at Geojit Financial Services has increased at a robust CAGR of 11.2 percent over the previous three years, led by expansion in the stock division.

At the same time, the net profit expanded at a high CAGR of 60.1 percent. Additionally, Geojit is a debt-free business.

Shares of the corporation are now selling at 8.5x the industry average.

Despite operating in a cutthroat sector, it has a sizable market share in the equities broking sector, which in the long future will be the company’s main source of income.

5. Jacob Prakashan

A media company is called Jagran Prakashan.

Its main business is printing and publishing magazines and newspapers. The business has recently expanded into FM radio, promotional marketing, event planning, outdoor advertising, and internet advertising.

34 printing facilities are run by Jagran Prakashan, which has 84 million readers. Additionally, it features 15 internet sites in 10 different languages, 39 radio stations, and ten magazines.

Among the well-known brands of the corporation are Dainik Jagran, Mid-day, and Radio City.

The pandemic caused a fall in Jagran’s sales and net profit, but the business quickly recovered.

It has a solid credit history. The debt-to-equity ratio was 0.1x and the interest coverage ratio was 4.2 times in the fiscal year 2021.

The company’s shares are presently trading at a PE ratio of 7.8x, which is much less than the 17.2x average for the sector.

The next fiscal year’s ad income is anticipated to rise now that the economy is improving.

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6. Love Fontech

Ador Fontech produces pulley lagging mats, welding electrodes, welding alloys, ceramic pipes, and other welding supplies.

Additionally, it maintains essential equipment for industries such as electricity, mining, steel, and refineries for petroleum.

The business produces and fixes welding items for its customers in two production facilities and one reclamation facility in India.

Like every other corporation, the company was impacted by the epidemic.

However, according to the most recent quarterly data, its sales increased by 25.9% year over year (YoY). Additionally, the net profit expanded at a strong 51.5 percent pace (YoY).

With zero debt and an interest coverage ratio of 22.9 times in the financial year 2021, the company’s debt metrics are also pretty solid.

Ador Fontech shares are presently selling at a P/E ratio of 10.9x, vs the industry standard of 39.8x. This demonstrates that the shares are undervalued in relation to the sector.

The company’s future development plans will boost its operational capacity, giving it the chance to boost income.

7. Showa Munjal

A manufacturer of automotive accessories, Munjal Showa creates parts for two- and four-wheeled vehicles.

It was founded as a partnership between Japan’s Showa Corporation and Hero Group.

Munjal Showa now has three production sites in India, where Indian markets account for all of its sales.

Due to the pandemic, Munjal’s income and net earnings decreased. However, the revenue increased at a solid rate as the economy began to open up.

The business has no debt, and its interest coverage ratio for the last fiscal year was 103.1 times.

Shares of Munjal Showa are now trading at a 35.4x P/E and a 0.6x P/BV.

Future income generation for Munjal will be fueled by the revival of the economy and the pandemic’s penned-up desire for autos.

8. Port of Gujarat Pipavav (GPPL)

India’s first port in the private sector is the Gujarat Pipavav Port. It links India to the far east on one side and the US, Europe, the Middle East, and Africa on the other.

It handles four different kinds of cargo: roll-on, roll-off ships, dry bulk, liquid bulk, and containers.

The parent business of Gujarat Pipavav Port, APM Terminals, one of the biggest port and terminal operators in the world, provides access to cutting-edge technology and operational expertise.

The company’s revenue increased at a CAGR of 1.2 percent during the previous three years, driven by modest operational expansion.

During the same time period, the net profit also increased with a CAGR of 1.4 percent.

Gujarat Pipavav has no debt and a 52.2 times interest coverage ratio for the fiscal year 2021.

P/E and P/BV for the firm are now 21.8x and 1.8x, respectively.

The company’s aggressive tariff rates and advantageous location are anticipated to propel growth and profit margins in the coming years.

9. Rubfila Worldwide

One of India’s top producers of heat-resistant rubber threads is Rubfila International.

Additionally, it is the only maker of silicon- and talc-coated rubber threads in India.

The company’s goods are used, among other things, in toys, bungee cords, medical webbing, and meat packing.

In addition to having a significant local presence, it also exports its goods to over 30 other nations.

Due to the significant demand for rubber threads, Rubfila International’s revenue increased at a CAGR of 14.3% during the previous three years.

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The net profit has likewise increased at a CAGR of 25.2% during the same time frame.

Being a debt-free business, it has a lot of room to use loans to fund growth. It has a strong interest coverage ratio of 178.4 times as of the fiscal year 2021.

In comparison to the industry average of 18.1x, Rubfila International’s shares are presently trading at a P/E ratio of 10.1x.

Read More – The 10 Best Penny Stocks in India to Add to Your Watchlist

10. Brands Pharma

Pharmaceutical product formulation is what Marksans Pharma does.

It focuses on over-the-counter and prescription medications with applications in cancer, gastrointestinal, gynaecology, antidiabetics, antibiotics, and pain management, among other medical specialties.

Over 80 medicines in 10 therapeutic groups make up the company’s varied product line.

In addition to having a significant local presence, it also exports its goods to over 25 other nations.

From research and development through the delivery of medications to final consumers, Marksans Pharma is active along the whole value chain.

For internal use, it intends to incorporate backwards into the production of active pharmaceutical ingredients (API).

The business grew over time by purchasing businesses all across the world.

Due to increased demand, Marksans Pharma’s revenue increased at a CAGR of 11.2 percent over the last three years.

At the same time, the net profit increased at a CAGR of 43.7 percent.

It has no debt on its books and a robust profit growth; in the fiscal year 2021, its interest coverage ratio was 38.8 times.

Shares of the firm are selling significantly below the 23.6x industry average when compared to its competitors. The P/E ratio for the firm is 8.5x.

The revenue in the next fiscal is anticipated to be driven by the introduction of new products.

Read More – The 10 Best Penny Stocks in India to Add to Your Watchlist

Why you need to invest in India’s top penny stocks

Due to their cheap pricing, penny stocks seem to be quite appealing. They are often used by traders and investors to make stock market speculations.

In addition, penny stocks have high volatility. A minor piece of news might cause a significant rise or decline in the share price.

It is advised that you use care while investing in penny stocks as a result.

Select only dependable genuinely sound stocks. In other words, equities that are selling at a discount to their rivals and have steady revenue and profit growth.

These equities have a strong growth potential over the long term and are relatively less volatile during market dips.

Picking the best penny stock is not difficult. By exercising some prudence, you may pick the greatest stocks for your portfolio.

Rahul Shah, Co-Head of Research at Equitymaster, provided advice on selecting the best penny stock for your portfolio in January 2022.

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