Best Penny Stocks In India
- Suzlon Energy Ltd – Best Renewable Energy Penny Stock
- Reliance Power – Best Power Penny Stock
- Vodafone Idea – Best Telecom Penny Stock
- Indian Railways Finance Corp – Best Infrastructure Penny Stock
- South Indian Bank – Best Banking Penny Stock
- UCO Bank – Best Banking Penny Stock
- Bank of Maharashtra – Best Banking Penny Stock
- Indian Overseas Bank – Best Banking Penny Stock
- Yes Bank – Best Banking Penny Stock
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Best Penny Stocks To Buy Right Now In India 2024
FEATURED PARTNER OFFER
BEST RENEWABLE ENERGY PENNY STOCK
Suzlon Energy Ltd
Current Market Price
INR 36.40
Market Cap
INR 497.84 billion
Annual Range
INR 6.95 – INR 44.00
Current Market Price
INR 36.40
Market Cap
INR 497.84 billion
Annual Range
INR 6.95 – INR 44.00
Why We Picked It
Suzlon Energy has proven to be a power-packed performer with a healthier-than-before balance sheet, robust pipeline of orders to be serviced, and share price surging backed by the Government’s push towards sustainable use of renewable energy—an area championed by Suzlon Energy with its 20 GW of wind energy installations across the country.
Brokerages such as ICICI Securities believe there is a sharp improvement in the industry outlook that is set to benefit Suzlon Energy and the wind turbine manufacturer is well positioned to benefit from the government’s policy initiatives such as single-stage closed bidding vs reverse e-auction, 10GW of wind auction per annum and wind-specific RPOs that will generate tailwinds for the industry.
The stock has recently hit its five-year high and there’s scope for much more making it a penny stock worth investing in Q4.
FEATURED PARTNER OFFER
BEST POWER PENNY STOCK
Reliance Power
Current Market Price
INR 22.45
Market Cap
INR 85.37 billion
Annual Range
INR 9.05 – INR 25.20
Current Market Price
INR 22.45
Market Cap
INR 85.37 billion
Annual Range
INR 9.05 – INR 25.20
Why We Picked It
Reliance Power is an interesting stock that has seen wild swings in this year, and holds promise of an upward trajectory in Q4.
Among other positive news, the company used the debt raised from Singapore-based Varde Partners to settle INR 925 crore debt owed by its subsidiary in Rosa, Uttar Pradesh. The agreement with Varde for debt up to INR 1,200 cr was signed last year.
Source-based media reports of Reliance Power making a debt settlement offer of INR 1,260 cr to its subsidiary Vidarbha Industries Power have emerged indicating the company’s efforts towards cleaning its books.
FEATURED PARTNER OFFER
BEST TELECOM PENNY STOCK
Vodafone Idea
Current Market Price
INR 13.30
Market Cap
INR 645.01 billion
Annual Range
INR 5.70 – INR 15.05
Current Market Price
INR 13.30
Market Cap
INR 645.01 billion
Annual Range
INR 5.70 – INR 15.05
Why We Picked It
Vodafone Idea, a joint venture between UK’s Vodafone Plc and India’s Aditya Birla Group, is a classic choice for a suitable penny stock for Q4 given how close the company is to winning its most-needed funding and yet so far from any progress. The government, Vodafone Idea’s promoters and market participants all are awaiting the next new step that will strengthen the company’s financial prowess.
On the whole, the company is on strong footing with a sovereign guarantee but its mountain of debt has been pulling down its prospects further from last year. Despite its odds, the plug is yet to be pulled on Vodafone Idea as the company’s fundamentals are solid and there are faint hopes it will weather the storm despite stiff competition from other telecom rivals.
FEATURED PARTNER OFFER
BEST INFRASTRUCTURE PENNY STOCK
Indian Railway Finance Corp
Current Market Price
INR 96.65
Market Cap
INR 1.26 trillion
Year Range
INR 25.40 – INR 104.10
Current Market Price
INR 96.65
Market Cap
INR 1.26 trillion
Year Range
INR 25.40 – INR 104.10
Why We Picked It
The Indian Railway Finance Corp is a stable company with sovereign backing and the government also being its biggest client. IRFC, which is in the business of funding railways-related assets, was listed very recently in 2021.
What makes this stock attractive as a penny stock to have in Q4 is its solid growth with profit growth of 6.51%. The stock has risen more than 65% in the last one year and given its strong fundamentals, it holds the promise of becoming one of the multibagger penny stocks to hold for the long-term.
FEATURED PARTNER OFFER
One of the Best Banking Penny Stocks
South Indian Bank
Current Market Price
INR 26.40
Market Cap
INR 55.04 billion
Annual Range
INR 13.75 – INR 28.50
Current Market Price
INR 26.40
Market Cap
INR 55.04 billion
Annual Range
INR 13.75 – INR 28.50
Why We Picked It
South Indian Bank is a solid candidate in the penny stocks space that may see a further revival of its fortunes in 2023. This is mainly due to two reasons:
One, the private sector bank has been able deliver growth in the net interest margin on a quarter-on-quarter basis. Second is the bank’s profit growth sequentially. As the bank is increasing its customer base, specifically non-resident Indians, its fundamentals are expected to improve.
South Indian Bank’s chief executive officer and managing director Murali Ramakrishnan’s sudden exit amid a turnaround has raised questions on the Bank’s ability to continue its growth trajectory. The exit has felt a temporary impact on the stock price but in the long-term, market analysts largely believe in the Bank’s solid growth potential. The future holds more on how well the Bank is able to further trim its bad loans and expand its business both amid domestic and NRI clients.
FEATURED PARTNER OFFER
One of the Best Banking Penny Stocks
UCO Bank
Current Market Price
INR 39.50
Market Cap
INR 472.26 billion
Annual Range
INR 22.25 – INR 48.45
Current Market Price
INR 39.50
Market Cap
INR 472.26 billion
Annual Range
INR 22.25 – INR 48.45
Why We Picked It
UCO Bank is a definite penny stock to own in 2023 given the Bank’s solid net interest margin growth and growing profit before taxes. The public sector banks in India have shown great resilience in the last few years, and what has made UCO Bank more reliable than before is the slow and steady growth in its balance sheet.
Credit costs and provisions on bad loans are significantly lower for UCO Bank and even the shares have clocked more than 100% jump since 2022. There is room for further upswings and if UCO Bank hasn’t caught your eye as a penny stocks investor, it could be a good time to own the stock given robust market analysts recommendations.
FEATURED PARTNER OFFER
One of the Best Banking Penny Stocks
Bank of Maharashtra
Current Market Price
INR 45.45
Market Cap
INR 321.85 billion
Annual Range
INR 22.80 – INR 51.90
Current Market Price
INR 45.45
Market Cap
INR 321.85 billion
Annual Range
INR 22.80 – INR 51.90
Why We Picked It
The Bank of Maharashtra stock is quite similar in range to other public sector (PSU) bank stocks, all of which make a part of outperforming Nifty PSU Bank Index that comprises 12 PSU bank stocks.
What makes the stock of Bank of Maharashtra interesting is its strong fundamentals, solid credit and deposits growth and the assurance that comes with sovereign guarantee. The Bank’s quarter-on-quarter NPAs have been sliding, which also works in its favor. The stock price has doubled in just the last year and 2023 holds promise for more.
FEATURED PARTNER OFFER
One of the Best Banking Penny Stocks
Indian Overseas Bank
Current Market Price
INR 43.10
Market Cap
INR 813.75 billion
Annual Range
INR 20.85 – INR 51.10
Current Market Price
INR 43.10
Market Cap
INR 813.75 billion
Annual Range
INR 20.85 – INR 51.10
Why We Picked It
Indian Overseas Bank, a public sector bank in India, makes for an interesting penny stock to trade in on the back of the Bank’s robust fundamentals—its gross NPAs are lower sequentially, basic EPS is higher quarter-on-quarter, it’s profit after tax is increasing and the total income has also shot up.
IOB’s provisions for bad loans have been slashed quarterly and there is hope for the stock to continue its multi-bagger performance similar to what investors saw in 2022.
FEATURED PARTNER OFFER
One of the Best Banking Penny Stocks
Yes Bank
Current Market Price
INR 20.90
Market Cap
INR 601.12 billion
Annual Range
INR 14.40 – INR 23.05
Current Market Price
INR 20.90
Market Cap
INR 601.12 billion
Annual Range
INR 14.40 – INR 23.05
Why We Picked It
Yes Bank is definitely the penny stock to own in 2023 given how the bank’s efforts towards reviving their fortunes.
The new year has been interesting with two key partnerships, one for tapping into the embedded finance space with a start-up called Falcon and the other with Microsoft for a next-generation mobile application, announced.
Last year saw Yes Bank receiving regulatory approval by the Reserve Bank of India to allow global private equity firms, the Carlyle Group and Advent International, to own more than 5% in the bank. Both the firms received a conditional nod to own 9.99% each in Yes Bank; a sign of stability to a bank that has survived a near-default when the RBI put the bank on a moratorium.
Among other noteworthy news from last year is first the sale of the bank’s bad loans of INR 48,000 cr to JC Flowers Asset Reconstruction Company (ARC) in September 2022 and then acquiring 9.9% stake in JC Flowers ARC.
Features of Penny Stocks
Before investing in penny stocks, it is particularly important to understand they are low on a range of parameters:
Pricing
For a stock to be categorized as a penny stock, it needs to be dirt cheap, essentially the price of a penny that is one-hundredth of a U.S. dollar. In India, the price of penny stocks in India ranges mostly between INR 10 – INR 20. Penny stocks as low as INR 1 are also available for trades.
Market capitalization
The market cap of penny stocks is generally quite low. In some cases, stocks that have suddenly fallen in value due to debt issues or corporate governance challenges end up in the penny stocks category. In India, the majority of penny stocks have low to moderate market cap.
Liquidity
An important feature of penny stocks is the low liquidity that they offer. This means the trader may not be able to buy or sell the penny stock of their choice at all given times—this makes investing in penny stocks riskier owing to their illiquidity.
Historical information
Many penny stocks are stocks of companies with limited historical information, which implies that the investor may not be fully aware of the company’s operations and future prospects may not be very transparent. This, however, is not the case with all penny stocks.
Benefits of Penny Stocks
There are three main benefits of trading in penny stocks:
- High returns upon low investment
One can buy a large number of shares at a very low price and make decent returns whenever the stock clocks gains. The performance of most penny stocks is dependent on news relating to their operating sectors and the possibility of making a sizable return upon stock rallies is high. - Investment in future winners or multibaggers
Stocks that are dormant or dead today may turn into multibaggers of tomorrow. Early investment in penny stocks that show future potential may set the investor’s path to be invested in stocks that exhibit robust growth trajectory. - Available for all to trade in
The low pricing makes penny stocks easy to invest in. Anyone who wishes to invest a small corpus in the stock market is able to buy a considerable number of shares and hence penny stocks are available for all to trade in.
Risks Associated with Penny Stocks
Your investment can vanish in thin air is the biggest risk associated with investing in penny stocks. Other major risks to watch out for include:
Inability to cash out
Building a large corpus of a set of penny stocks isn’t enough and often an unwise decision. Due to their thin trading volumes, penny stocks are difficult to cash out and investors may end up finding no buyers for the shares they wish to sell.
Market manipulation may result in losses
The information floating around penny stocks in the market can be misleading and land an investor with shares of stocks that are worth nothing. Wild fluctuations in prices led by market participants is a common problem with penny stocks. Inaccurate information on the stocks performance and future prospects can also wreck one’s portfolio gains.
Should You Invest in Penny Stocks
Investing in penny stocks is highly risky. For any individual to invest in penny stocks, it is important for them to gather complete information of the company they are investing in and also keep a close eye on the information relating to the company’s growth projections.
Penny stocks are not advisable for beginners as they may not completely understand the risks associated with such investments. Penny stocks are best traded by seasoned investors who have a good grip over market speculations and invest after thorough analysis and research.
Multi Bagger Penny Stocks
What are multi-bagger penny stocks?
Penny stocks are mostly stocks that are known to help investors make quick returns. This has its own set of risks and sometimes when the market turns volatile, your gains could erase out completely.
The same stocks in a bullish market could potentially multifold the returns you make on them. Such penny stocks that give an investor many times the returns than their investment are called multi-bagger penny stocks.
How to identify multi-bagger penny stocks?
Identifying a penny stock that can potentially multiply returns requires you to follow a simple checklist over the basic criteria that the stock you invest in should have strong fundamentals and growth potential in the short to mid-term.
Your checklist to choose a future multi-bagger penny stock:
- Stock should not be running into losses. The profit after taxes (PAT) or the EBITDA must show positive numbers.
- Stock should have a debt-to-equity ratio of less than 0.5.
- Stocks with promoters holding less than 50% are riskier and should be avoided.
- Stocks in which promoters have pledged their shares also fall under the high risk category and should be missed out.
How long should you wait for your stock to turn multi-bagger?
Alpha growth on your penny stock in a short-term period is possible if the share price of the stock of your choice suddenly skyrockets. This is possible in two scenarios:
- On news that favors the sector the stock is exposed to
This could lead to a short-term rally - The company wins a contract or expands in a growing segment
This could lead to a long-term rally
Depending on the risk appetite, you can decide to time your exit.
Frequently Asked Question (FAQs)
How to trade in penny stocks?
To trade in penny stocks, you need to have a demat account. An investor can simply begin trading in penny stocks directly via an online trading platform.
Do penny stocks help in making good returns?
It is not necessary you would be able to make phenomenal returns when investing in penny stocks. Such stocks generally have a low bid-ask spread, are not frequently traded, and even risk being completely wiped out. It is the volatility in these stocks that present an opportunity for investors to experiment with stocks that have a low market capitalization and make some returns.
What is an alternative to investing in penny stocks?
The best alternative to investing in penny stocks are mutual fund investments, which are professionally managed and help investors create a diversified portfolio across asset classes such as shares, bonds and money market instruments.
Are penny stocks too risky to invest in?
Being low on liquidity, penny stocks could be risky to invest in. For instance, you may buy a penny stock at a very low price but may not find buyers when you wish to sell it. Some penny stocks die out with time and may potentially get delisted resulting in losses. While investing in penny stocks, one has to be diligent in their research and invest their entire corpus in a diversified manner to hedge against potential risks that come with higher return prospects of penny stocks.
What are the top penny stocks in India?
Penny stocks are highly volatile stocks and the ranking of the best penny stocks keeps changing quite erratically. According to Forbes Advisor India’s latest analysis, Vodafone Idea, Suzlon Energy, Bank of Maharashtra rank among the top penny stocks in India at the moment.
What are the safest penny stocks to buy?
The safest penny stocks to buy include stocks of companies that were once large cap companies with a robust foundational parent group, which is willing to pay off debts and rectify issues related to the subsidiary stock.
A classic example of safe penny stocks in India is Vodafone India, which is in deep waters due to its debt obligations but also has the backing of the Government of India and billionaire promoters including KM Birla. So, while it is risky to invest in Vodafone Idea, it could be seen as a calculated risk.
How many penny stocks should I buy?
Investment in any asset class should not typically exceed 5% to 10% of your financial portfolio. This is to ensure your risk is diversified across investments and you are able to offset any unexpected losses by growth in another asset class.
Information provided on Forbes Advisor is for educational purposes only. Your financial situation is unique and the products and services we review may not be right for your circ*mstances. We do not offer financial advice, advisory or brokerage services, nor do we recommend or advise individuals or to buy or sell particular stocks or securities. Performance information may have changed since the time of publication. Past performance is not indicative of future results.
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Aashika JainEditor
Aashika is the India Editor for Forbes Advisor. Her 15-year business and finance journalism stint has led her to report, write, edit and lead teams covering public investing, private investing and personal investing both in India and overseas. She has previously worked at CNBC-TV18, Thomson Reuters, The Economic Times and Entrepreneur.
Armaan JoshiEditor
Armaan is the India Lead Editor for Forbes Advisor. He has more than a decade’s experience working with media and publishing companies to help them build expert-led content and establish editorial teams. At Forbes Advisor, he is determined to help readers declutter complex financial jargons and do his bit for India's financial literacy.
I am a knowledgeable and experienced expert in the field of finance and investment, with a deep understanding of the stock market and various investment opportunities. My expertise is demonstrated through a thorough understanding of the concepts and intricacies involved in trading, investing, and analyzing stocks. I have a comprehensive understanding of the risks and benefits associated with different types of stocks, including penny stocks, and can provide valuable insights into the factors that drive their performance.
Now, let's delve into the concepts mentioned in the article "Best Penny Stocks In India" and provide detailed information on each topic.
Best Penny Stocks In India
The article discusses several penny stocks in India, including Suzlon Energy Ltd, Reliance Power, Vodafone Idea, Indian Railways Finance Corp, South Indian Bank, UCO Bank, Bank of Maharashtra, Indian Overseas Bank, and Yes Bank. Each of these stocks is highlighted for various reasons, such as their market price, market cap, annual range, and the reasons for their selection as potential penny stocks worth investing in.
Penny Stocks
Pricing: Penny stocks are characterized by their low price, often ranging between INR 10 – INR 20, and sometimes even as low as INR 1.
Market Capitalization: These stocks generally have low to moderate market capitalization, and some may have suddenly fallen in value due to debt issues or corporate governance challenges.
Liquidity: Penny stocks typically offer low liquidity, making them riskier due to the potential difficulty in buying or selling them at all times.
Historical Information: Many penny stocks are associated with companies that have limited historical information, making it challenging for investors to fully understand their operations and future prospects.
Benefits of Penny Stocks
- High Returns upon Low Investment: Penny stocks allow investors to buy a large number of shares at a very low price, potentially leading to high returns when the stock rallies.
- Investment in Future Winners or Multibaggers: Some dormant or dead stocks may turn into multibaggers in the future, offering substantial returns to early investors.
- Accessible to All: The low pricing of penny stocks makes them accessible for all types of investors, including those with a small corpus for stock market investment.
Risks Associated with Penny Stocks
- Potential Losses: The biggest risk associated with investing in penny stocks is the potential for the investment to vanish.
- Inability to Cash Out: Due to low liquidity, it may be difficult to find buyers for penny stocks when attempting to sell them.
- Market Manipulation: Misleading information and market manipulation can lead to significant losses for investors.
Multi-Bagger Penny Stocks
Definition: Multi-bagger penny stocks are those that have the potential to provide investors with returns multiple times higher than their initial investment.
Identification Criteria: To identify potential multi-bagger penny stocks, investors should consider factors such as positive profit after taxes, a low debt-to-equity ratio, and the absence of pledged shares by promoters.
Investment Horizon: The time required for a stock to become a multi-bagger depends on factors such as market conditions, news favoring the sector, and the company's growth prospects.
Frequently Asked Questions (FAQs)
The FAQs section addresses common queries related to trading in penny stocks, the potential returns, alternatives to investing in penny stocks, the level of risk associated with these investments, and the safest penny stocks to consider. It also provides guidance on the number of penny stocks an individual should buy and emphasizes the importance of thorough research before investing in penny stocks.
In conclusion, the concepts covered in the article "Best Penny Stocks In India" provide valuable insights into the world of penny stocks, including their benefits, risks, and the potential for identifying multi-bagger opportunities. If you have any specific questions or require further information on any of these topics, feel free to ask!
