Now that discount brokerages are there, retail investors have been spared brokerage fees. While it may sound that 1% makes no difference, use a compound interest calculator and find the difference. That being said, there is still the absence of a proper corpus with retail investors because of which buying Low Price Shares seem attractive.
People often have portfolios as small as 10,000 and with an amount of that size, you cannot be happy with 3 shares of a BlueChip company. This article helps you identify low price stocks i.e. stocks with current market price being less than 100 that can be worth your time.
While the ‘share price’ makes no difference – it is the market value of the company that matters – the mind really feels weird with larger absolute numbers.
We suggest readers give some thought to the low price shares mentioned below and might even go through the annual reports.
Sadhana Nitro Chem Ltd – ₹40
The company manufactures downstream derivatives of Nitrobenzene and other intermediates for applications in various important industries ranging from aerospace and pharma to dye manufacturing.
The company has started to return profits for the last 5 years and the 5-year compounded profit growth (39%) has exceeded their 5-year sales growth of 24%. The bottom line growth exceeding the top-line growth is a good sign for the company.
Pasupati Acrylon Ltd – ₹31
The company is involved in Acrylic fibre production and has diversified into the production of CPP Films.
The company claims to be ‘world leader in Acrylic fibre production’.
As far as the financials are concerned, the company is a little shaky. Over the past 5 years, there have been some adverse developments that require an in-depth analysis.
Jamna Auto Industries Ltd – ₹100
Jamna Auto Industries Limited is the largest manufacturer of Tapered Leaf and Parabolic Springs for Commercial Vehicles (CVs) in India. The company has a dominant share of 68% as it is the leading supplier for leading CV OEMs in India. The network includes 300+ distributors, 11,500+ retailers and 15,000+ mechanics across India. Companies like Ashok Leyland, Tata Motors, Force, Bharat-Benz, Mahindra are some of its customers.
Just like the last company, there have been some issues with this one over the past 5 years. The CAGR for sales has been negative and zero for profits. However, the reason for our recommendation is its distribution network and its clients.
In our opinion, the company(or the industry) is worth a deeper assessment.
KMC Speciality Hospitals (India) Ltd – ₹62
Kauvery Hospital is a multi-specialty Indian hospital chain based in Trichy and Hospitals located in Trichy, Chennai, Hosur, and Salem, Bengaluru. The reason for the recommendation is the sheer dearth of healthcare facilities in India. Healthcare and Genomics are industries of the future, the tailwinds for which have already started. This company is a way to play that theme.
While the sales growth has been poor, the return ratios(Particularly ROE) are impressive. Additionally, the company is also debt-free.
Readers however should note that ‘low price shares’ by themselves do not indicate high growth. It is about the Market Capitalization of the company. So if you can also buy high-quality companies and enjoy steady compounding for the long term.
Disclaimer: the views expressed by the writer are their own and not of the website or the management. The writers may or may not have a stake in the mentioned companies. Readers are requested to consult a SEBI registered investment advisor and make a decision accordingly.