Penny Stocks Under Rs 5: Investors run after penny stocks because of the prospects of earning multi-bagger returns. Penny stocks are high-risk/reward bets that can go in any direction pretty quickly. While the old adage of avoiding penny stocks still holds true, we have compiled a list of top penny stocks under Rs 5 below if you still want to go big or go home.
Penny Stocks Under Rs 5
In this article, we have put together the top penny stocks under Rs 5 which risk-taking investors can add to their watchlists. In the company description, we talk about the business and key metrics which make these penny stocks attractive.
Before we jump to the list, a short section is devoted to understanding the research methodology.
Research Methodology
The list has covered stocks trading between Rs 5 and Rs 1 only. We have kept the upper range of market capitalization at Rs 1,000 crore. Additionally, the debt to equity upper limit was set as 1 to avoid heavy debt penny stocks.
Along with this, a filer for a minimum promoter holding of 40% was set with both return ratios (RoCE and RoE) being more than 1.
Having acquainted ourselves with the filters used, let us now move ahead to know the top stocks under Rs 5 mentioned in this article.
Penny Stocks Under Rs 5 #1 – Vertex Securities
| CMP | ₹2.48 | Market Cap (Cr.) | ₹18.4 |
| EPS | ₹0.04 | Stock P/E | 65.6 |
| ROCE | 8.89% | ROE | 2.95% |
| Face Value | ₹2.0 | Book Value | ₹1.3 |
| Promoter Holding | 73.4% | Price to Book Value | 1.9 |
| Debt to Equity | 0.66 | Dividend Yield | 0.00% |
| Net Profit Margin | 3.04% | Operating Profit Margin | 15.4% |
Vertex Securities is an end-to-end digital platform for trading in equity and derivatives (futures and options). It is a small-cap company listed on the Bombay Stock Exchange since 1993. The company has main offices in Cochin and Mumbai.
Over the years, Vertex has emerged as one of the major players in India’s financial services sector. It provides technology for trading/investing in stocks, commodities, currency markets, IPOs, and mutual funds through a mobile app and website.
It boasts a pan-Indian presence with a network of 250 offices across India. The financial services company has a high promoter holding of 73.4%, out of which 53.04% is held by Transwarranty Finance, a full-service investment banking company.
Its revenues have grown from Rs. 8.17 crore in FY18 to Rs. 9.21 crore in FY22. At the present price of Rs. 2.48, it is a penny stock with an attractive price-to-book value ratio of 1.9.
Penny Stocks Under Rs 5 #2 – Swasti Vinayaka Art & Heritage Corporation
| CMP | ₹2.84 | Market Cap (Cr.) | ₹25.6 |
| EPS | ₹0.25 | Stock P/E | 11.4 |
| ROCE | 11.50% | ROE | 9.05% |
| Face Value | ₹1.0 | Book Value | ₹1.88 |
| Promoter Holding | 51.0% | Price to Book Value | 1.51 |
| Debt to Equity | 0.42 | Dividend Yield | 0.00% |
| Net Profit Margin | 14.40% | Operating Profit Margin | 27.2% |
Swasti Vinayaka Art & Heritage Corporation is a diversified company with three revenue streams. To start with, it manufactures carvings of precious and semi-precious stones, paintings, and jewelry.
It also receives compensation against a property.
In addition to this, it has funds devoted to long-term investments in blue-chip stocks. The management makes use of fundamental analysis and an in-house technical analysis model to achieve consistent returns.
The company is based out of Lower Parel, Mumbai, Maharashtra. Swasti Vinayaka Art & Heritage Corp. has a low debt-to-equity ratio of 0.42 with high-profit margins. The stock presently trades at an attractive book value of 1.51 and has a promoter holding of 51%.
Penny Stocks Under Rs 5 #3 – Luharuka Media & Infra
| CMP | ₹2.62 | Market Cap (Cr.) | ₹24.6 |
| EPS | ₹0.07 | Stock P/E | 37.2 |
| ROCE | 5.31% | ROE | 4.11% |
| Face Value | ₹1.0 | Book Value | ₹1.55 |
| Promoter Holding | 51.5% | Price to Book Value | 1.69 |
| Debt to Equity | 0.32 | Dividend Yield | 0.00% |
| Net Profit Margin | 33.9% | Operating Profit Margin | 56% |
Luharuka Media & Infra is an NBFC with a key focus on inter-corporate loans, personal loans, loans against properties, loans against shares & securities, mortgage loans, auto/home loans, trade financing, bills discounting, and trading in shares & securities.
It is a part of the Comfort Group, a business group of five companies started by Anil Agrawal in 1994. Luharuka Media & Infra obtained a Certificate of Registration from the Reserve Bank of India in the name of the company.
The company has high-profit margins. Its net profit margin and operating profit margin stood at 33.9% and 56% in FY22 respectively.
In the last five fiscal years, it has generated profits except for FY20. The stock has a low debt-to-equity ratio of 0.32 and trades at a lucrative price-to-book value of 1.69.
Penny Stocks Under Rs 5 #4 – Seacoast Shipping Services
| CMP | ₹4.39 | Market Cap (Cr.) | ₹148 |
| EPS | ₹0.18 | Stock P/E | 12.4 |
| ROCE | 9.67% | ROE | 5.50% |
| Face Value | ₹1.0 | Book Value | ₹1.62 |
| Promoter Holding | 52.9% | Price to Book Value | 2.73 |
| Debt to Equity | 0.44 | Dividend Yield | 0.00% |
| Net Profit Margin | 2.0% | Operating Profit Margin | 5.14% |
Founded in 2005 as a freight forwarders and shipping agents company, Seacoast Shipping Services Limited (SCSSL) has grown to become one of the largest freight forwarders in Gujarat.
SCSSL is among the top 3 freight forwarders handling service of agri-commodities exports in containers from Mundra port. It has been working as an international ship operator of modern dry bulk vessels carrying around 5.0 million mt of bulk /and unitized cargo across the oceans.
The logistics company offers integrated freight forwarding services with transportation of containers & cargo for stuffing, phytosanitary service & customs house clearing services.
The stock presently trades at a P/E ratio of 12.4 offering the company a market capitalization of Rs 148 crore. The company reported earnings of Rs. 11 crore and Rs 3 crore in FY21 and FY22 respectively.
Penny Stocks Under Rs 5 #5 – Godha Cabcon and Insulation
| CMP | ₹3.15 | Market Cap (Cr.) | ₹70 |
| EPS | ₹0.03 | Stock P/E | 98.5 |
| ROCE | 6.16% | ROE | 3.31% |
| Face Value | ₹1.0 | Book Value | ₹1.13 |
| Promoter Holding | 69.5% | Price to Book Value | 2.8 |
| Debt to Equity | 0.06 | Dividend Yield | 0.00% |
| Net Profit Margin | 2.3% | Operating Profit Margin | 4.0% |
Godha Cabcom and Insulation is a small-cap manufacturer of electronic cables and conductors. Its product portfolio covers all aluminum alloy conductors, steel-reinforced aluminum conductors, and armored & unarmoured cables.
The company traces its origins back to 1987 when an ACSR Conductor manufacturing unit at Dewas. The facility was moved to Indore and started again in 2006 after a break of 4 years.
Godha Carbon has scaled its operations in the last three years increasing production capacity more than two times. It has also set up a manufacturing facility for XLP Coated wire, a new product with new technology in the wire industry.
The stock has a high promoter holding of 69.5% and a low debt-to-equity ratio of 0.16. It trades at a price-to-book value ratio of 2.80.
List of Penny Stocks Under Rs 5
Presented below is a table that lists the penny stocks under Rs 5.
| Company Name | Industry | CMP (Rs. Cr.) | Market Cap (Rs. Cr) |
|---|---|---|---|
| Vertex Securities | Financial Services | 2.48 | 18.4 |
| Swasti Vinayaka Art & Heritage Corp | Ceramics | 2.84 | 25.6 |
| Luharuka Media & Infra | NBFC | 2.62 | 24.6 |
| Seacoast Shipping Services | Logistcs | 4.39 | 148 |
| Godha Cabcon and Insulation | Electric Equipment | 3.15 | 70 |
| Shree Global Tradefin | Iron and Steel | 4.70 | 598 |
| Viji Finance | NBFC | 2.80 | 23 |
In Conclusion
Penny stocks are highly speculative in nature. They are risky because they lack liquidity. Their bid and ask spreads are usually large which brings a lot of volatility in their prices. Many penny stocks are prone to pump-and-dump strategies.
However, if eyed right, some penny stocks indeed have the potential to generate multi-bagger returns. As an investor, which type of stocks do you prefer? How about we continue this conversation in the comments below?
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