When it comes to penny stocks in India, there is a lot to delve into. People are often curious about why these stocks have become penny stocks and what their future prospects hold. If you’ve landed on this blog, you’re likely eager to learn more about penny stocks in practice. So, here’s a compilation of the top penny stocks in India for your knowledge.

Fun Fact: The term “Penny” originates from the US currency denomination, which is equivalent to 1 cent or roughly $0.01. In the past, there was a time when US shares were available for less than a dollar.

The Ultimate Guide: Best 10 Penny Stocks in India for 2023.

Please take into account that penny stocks frequently have low liquidity, which can present difficulties for buyers and sellers in finding each other. Furthermore, the potential for growth in these stocks might be restricted.

Indian Overseas Bank (IOB):

Established 86 years ago, Indian Overseas Bank is a public sector bank that specializes in retail banking and operates over 3000 branches nationwide.

Recently, in the last quarter of FY 22-23, IOB posted a profit of ₹650 crores, marking an 18% increase over the same period last year. The profits were primarily driven by interest income.

Indian Overseas Bank share price: ₹23.80 Indian Overseas Bank market cap: ₹45,290 Cr P/E ratio: 21.59 Dividend Yield: None

One key factor in evaluating banks is their Non-Performing Assets (NPAs), and IOB has successfully reduced its NPAs from over 9% to 7.44%. NPAs represent the bank’s inability to recover loans and other debts.

The interesting aspect lies in the shareholding pattern, with promoters owning over 96% of IOB. In contrast, DIIs & FIIs have less ownership than retail investors.

Yes Bank:

Once valued close to ₹400, Yes Bank is now classified as a penny stock, trading at ₹15.55. It started its operations in 2004 and became one of India’s leading banks in 2008.

Yes Bank share price: ₹15.55 Yes Bank market cap: ₹44,801 Cr P/E ratio: 62.32 Dividend Yield: None

Multiple factors, including improper management and growing NPAs primarily associated with bad loans to companies, led to Yes Bank’s downfall. In the last quarter of FY22-23, Yes Bank posted a loss of ₹202.43 crores, down by 45% YoY but up more than 4x from Q3 FY22-23. NPAs decreased to 2.17% from 13.93% YoY.

Indian Railway Finance Corp (IRFC):

Indian Railway Finance Corporation is a government-controlled financial institution that provides financing for the Indian Railways’ various needs. IRFC has been active for 37 years and went public in 2021 through its IPO.

Indian Railway Finance Corp share price: ₹33.85 Indian Railway Finance Corp market cap: ₹43,557 Cr P/E ratio: 6.69 Dividend Yield: 4.20%

IRFC stands out as one of the best penny stocks due to its status as a Public Sector Undertaking (PSU). Additionally, the company posted a net profit of ₹1,633 crores in Q3 FY22-23.

Vodafone Idea:

Vodafone and Idea merged in 2018 to form Vodafone Idea. The combined stock once traded close to ₹60 in 2019 but has since fallen below ₹10.

Vodafone Idea share price: ₹6.95 Vodafone Idea market cap: ₹33,978 Cr P/E ratio: – Dividend Yield: None

Vodafone Idea became a penny stock due to various reasons, including legal issues and dwindling profits. However, its market cap still surpasses that of Bank of India and Jubilant Foodworks. In Q3 FY22-23, Vodafone Idea posted a loss of ₹7,990 crores, losing more than 6 million subscribers, a significant metric for telecom companies, during the same quarter. The company is expected to announce Q4 results soon.

Central Bank of India:

While the Central Bank of India isn’t India’s central bank (that’s the RBI), it is a public sector bank. Celebrating its 112th anniversary in 2023, Central Bank of India has seen a shift from being one of the best penny stocks in 2010 to its current status.

Central Bank of India share price: ₹26.30 Central Bank of India market cap: ₹23,022 Cr P/E Ratio: 14.39 Dividend Yield: None

In 2010, CENTRALBK traded at over ₹185. However, inconsistent deposits, bad debts, dwindling interest rates, and regulatory hurdles led to a drop in CENTRALBK’s share price. But it’s not all bad news as the bank recently announced an 84% growth in net profit for Q4 FY22-23, amounting to ₹571 crores, while net NPAs fell to 1.77%.

Suzlon:

Established in 1995, Suzlon is a wind and solar energy company. Its journey is notable in understanding how it became a top penny stock.

In 2008, when Suzlon was trading at over ₹400, the global financial crisis occurred, impacting markets worldwide. Suzlon’s business in Europe and North America, which collapsed due to the fall of Lehman Brothers, coupled with other factors, resulted in ballooning debt and a loss of confidence in the stock.

Suzlon share price: ₹10.10 Suzlon market cap: ₹11,417 Cr P/E Ratio: – Dividend Yield: None

After a couple of restructuring exercises, Suzlon received a large order for its wind turbines from Torrent Power. The company’s consolidated net profit for Q3 FY22-23 grew to ₹78.28 crores.

Alok Industries:

Founded in 1986, Alok Industries manufactures textiles, primarily cotton and polyester. The company went public in 1993 and underwent integrations with other businesses.

Alok Industries share price: ₹12.90 Alok Industries market cap: ₹6,430 Cr

Alok Industries has lately traded as a top penny stock, with its price ranging from ₹10 to ₹50. In Q4 FY22-23, the company’s total revenue dropped to ₹1,569.72 crores, while the loss stood at ₹297.55 crores.

Jammu & Kashmir Bank (J&K Bank):

Established in 1938, J&K Bank offers diverse financial services, ranging from corporate banking to loans and insurance.

J&K Bank share price: ₹55.40 J&K Bank market cap: ₹5,335 Cr P/E Ratio: 4.42 Dividend Yield: None

Similar to other top penny stocks, J&K Bank once traded in the ₹100s. The bank recently recorded a net profit of ₹1,197 crores in FY22-23, with an NPA of 6.04%, an 8-year low.

Reliance Power:

Founded in 1995, Reliance Power engages in power generation and distribution. The company faced several roadblocks during its IPO filing in 2007.

Reliance Power share price: ₹12.40 Reliance Power market cap: ₹4,631 Cr P/E Ratio: – Dividend Yield: None

The IPO faced initial troubles, and the stock debuted in 2008 amidst volatile markets. Combined with the global financial crisis and insufficient retail participation, the stock dropped nearly 20% on its debut. Fast forward to 2023, and Reliance Power is now a top penny stock.

Infibeam Avenues:

Established in 2007, Infibeam Avenues provides financial services, particularly in payments processing. The fintech company went public in 2016 and traded at around ₹228 in 2018.

Infibeam share price: ₹14.45 Infibeam market cap: ₹3,872 Cr P/E Ratio: 30.00 Dividend Yield: 0.35%

However, Infibeam Avenues’ share price crashed by 70% in a single day in 2018. As of Q3 FY22-23, the company reported a net profit of ₹35.81 crores for the quarter, a 4.45% YoY increase.

Conclusion:

That concludes the list of the top penny stocks in India for 2023. Economic and business factors have led to significant changes in the valuations of these stocks. It’s important to note that penny stocks often lack liquidity, which can make it challenging for buyers to find sellers and vice versa. Additionally, the growth prospects for these stocks may be limited.

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