Produced by: Tarun Mishra
Designed by: Manoj Kumar
Penny stocks, typically valued between Rs 5 to Rs 30 per share, are often viewed as speculative investments with high short-term risks. However, when invested at right time, they deliver returns much faster than their large- and mid-cap peers. Here are a few penny stocks that have delivered over 100% gains in past few months.
Suzlon Energy’s share price today made a gap down opening and closed 1.5% lower at Rs 25.6 per share on NSE. However, the stock of Suzlon Energy has given massive gains of over 250% in last 6 months. Suzlon Energy reported 96% drop in consolidated net profit at Rs 101 crore in Q1FY24.
With a market capitalisation of Rs 34,969 crore, the wind energy firm has a Price-to-Earnings (P/E) ratio of 68.37, indicating its valuation in relation to earnings. The Price-to-Book (P/B) ratio stands at 11.25, reflecting the market's assessment of its book value. Notably, the dividend yield is currently at 0% and the Debt-to-Equity ratio is 1.76, signifying the company's financial leverage.
On Wednesday, Bajaj Hindusthan Sugar's share price opened flat on NSE but closed 3.68% higher by the end of the trading session. The shares have climbed 130% in the last 6 months. Bajaj Hind reported an 65% YoY jump in its consolidated net loss during Q1. The company's revenue declined 11% to Rs 1,363 crore.
With a market capitalisation of Rs 3,449 crore, Bajaj Hind currently has a price-to-book (P/B) ratio of 0.80. The dividend yield is presently at 0%. Furthermore, the company maintains a debt-to-equity ratio of 0.97, reflecting its financial leverage and the balance between debt and equity in its capital structure.
Shares of Indian Railway Finance Corp (IRFC) on Wednesday opened in green but subsequently closed trading 0.86% lower. At Rs 1,557 crore, IRFC announced a 6.3% decline in its net profit in Q1 However, the net profit rose 17% on a sequential basis. The stock price of IRFC has surged a massive 190% in last 6 months.
With a substantial market capitalisation of Rs 99,268 crore, IRFC reflects a significant market value. The Price-to-Earnings (P/E) ratio for the trailing twelve months (TTM) stands at 15.92. The Price-to-Book (P/B) Ratio is at 2.11, indicating the market's assessment of its book value. The rail segment firm's stock offers a dividend yield of 1.97%, signifying returns to shareholders through dividend distributions. The Debt-to-Equity ratio is at 8.72.
A low market price often corresponds to reduced market capitalisation, affecting the overall value of the company's shares. This reduced liquidity can pose challenges for shareholders seeking to sell their holdings, as finding buyers in the market may prove challenging, leading to delayed transactions. Penny stocks typically experience low trading volumes, making them thinly traded assets. This limited trading activity can contribute to market inefficiencies and increased price volatility.
Penny stocks are susceptible to artificial inflation of share prices, commonly associated with fraudulent practices like the "pump and dump" scheme. This fraudulent activity involves disseminating false information about the company's financial health, artificially inflating stock prices before orchestrating a rapid sell-off, causing significant losses for unsuspecting investors. This practice is particularly prevalent in microcap stocks, sometimes referred to as "supernovas". Investors should be careful before investing in penny stocks.