When a company wants to grow, it needs money to do so. The company can either use debt or equity to get money. Companies that go ‘public’ i.e. companies that do an IPO raise money via equity – these are called Public Limited Companies. So on a very fundamental level, every company that does an IPO is similar. The price of the share can differ but fundamentally, they are the same. Companies with very low share prices are called penny stocks.
The question then becomes ‘how low should a price be to call it a penny stock’? Well, there is no exact answer to that. In the USA as the name suggests, these are available for pennies. Pennies do not work in India, so the line is a little blurry.
This article provides you a list of Penny Stocks that you can buy but do ensure we do not encourage you to do the same.
Penny Stocks to Buy
Bihar Sponge Iron Ltd
The plant has a capacity of 2,10,000MT and the company also has an internal plant of 5MW. Bihar Sponge Iron Ltd is engaged in the manufacture, production, purchase, export, sale, and deal of sponge iron. The company’s primary product, sponge iron, is preferred by secondary steel producers for producing long products for meeting the demand of the construction and infrastructure sectors.
Welcure Drugs & Pharmaceuticals Ltd
The company is involved in the manufacture and marketing of pharmaceutical formulations in the form of tablets, capsules and dry syrups. The Company manufactures over hundred varieties of formulations including antibiotics, vitamins, analgesics, antipyretics etc.
PTC India Financial Services Ltd
PTC India Financial Services Limited (PFS) is a NBFC registered with RBI and holds the status of Infrastructure Finance Company. It provides equity/debt financing solutions to the energy value chain. The company earns 98% of its revenue from interest by financing loans and the rest comes in the form of fees. The Co counts Adani transmissions as its clients. The company’s 3-year profit CAGR has been 31%.
A Infrastructure Ltd
A Infrastructure Ltd is into manufacturing of products ranging from Asbestos Cement Pressure Pipes & Asbestos Cement Sheets. The Company is the largest manufacturer of Asbestos Cement pipes in India. The company earns 60% of its revenue from A.C. Sheets, 38% from A.C. Pressure pipes. The manufacturing plants have an aggregate installed capacity of 1,31,000 MT for AC pipes and 1,50,000 MT for AC sheets.
The company has given a stock price CAGR of 29% on the back of a CAGR profit growth of 147%.
Are Penny Stocks Bad?
Famous Billionaire investor Vijay Kedia says that there are over 7000 listed companies in India and there are 4 main ‘Caps’ they can be divided into –
Large Cap, Mid Cap, Small Cap, and Bhangaar Cap. Almost all Penny Stocks are members of the Bhangaar Cap. We instead recommend you to buy High-Quality names that look cheap on PE.
Penny Stocks are often fraudulent companies. Often, these are ‘shelf companies’ that are shallow and cheap enough that they never catch the regulator’s eye. You run the risk of owning a company that has fraudulent accounts.
Investing is a game of probability. The word ‘buy’ can imply trading or investing and ‘investing’ further has the question relating to time periods. Traders do not require a fundamental analysis and therefore can gamble in Penny Stocks and benefit from them. Investors on the other hand need to be wary. You can make money in Penny Stocks but the probability of that is very low.
Typically, multibaggers at times are available at pennies and it seems foolish to have not bought those but that is just hindsight bias. Eicher Motors and Avanti Feeds were amongst the fastest growing companies in Indian History and these were available at throw-away prices when no one was looking their way. It seems easy to have spotted those but in reality – the holders of such companies are just lucky.
The readers might not enjoy the answer but Penny Stocks are not worth it. Stocks that turn out to be baggers seem convincing enough to buy Penny Stocks but that is Survivorship Bias. You are looking at the stocks that survived to become multibaggers but not the ones that got delisted or gave negative returns.
While the article provides you with a list of penny stocks, we urge the viewers to proceed with caution. Just becasue you can invest in the stocks doesn’t mean that you should.
If the readers still wish to know the total number of penny stocks in India, they can use a website called Screener.in and create a screen that shall filter out expensive stocks for them. The readers can even use their discretion and put in the maximum price they are willing to pay for a stock.