Penny stocks are generally considered as highly speculative and high beta stocks. Further, they have very low price, have very low market capitalisation, are mostly illiquid, are considered highly risky because of lack of liquidity, have smaller number of shareholders, large bid-ask spreads and limited disclosure of information.
On the other hand, these stocks can become big thing and be multibaggers. The investors would like to invest on the stocks, who are in lot demand and have volume driven sales, negligible debt on the books, asset light expansion etc. Further, the penny stocks that need to be invested should have free cashflows. Therefore, the investors should diversify their portfolio and keep a stop loss while investing.
Best Penny Stocks for Q1 2018
The New Year is round the corner, which means generally the company will be entering in the fourth quarter of FY 17. Therefore the investors are looking for returns in three to six months, which will be the first quarter of 2018. Some penny stocks to look at:
Suzlon Energy Ltd (Mkt. Price: INR 13.45)
The company has won an order of 50.40 MW wind power project from Riyadh based Alfanar Group. This is a first order from Alfanar, which is for 24 units of S111-90m wind turbine generator and each with a rated capacity of 2.1 MW. The project is expected to be completed by March 2018. The company in the Q1 FY 18 has reported 62 percent growth in the revenue to INR 2,665 crores and new products constitute 76% of volume.
GTL Limited (Mkt. Price: INR 14.05)
GTL has completed a Strategic Debt Restructuring (SDR) exercise and expects to become debt free in the next 3-4 years. GTL Infra has completed its first step in the SDR process, that includes reduction of debt of its combined tower companies (GTL Infra and CNIL) to ₹4,800 crore. This is a sustainable level of debt, which includes the proposed restructured amount of bonds. Further, in this a total of 22 lenders have converted ₹4,500 crore of debt into equity. Moreover, as per regulatory filings, the combined EBITDA for FY16-17 is expected to be around ₹1,120 crore, which means that GTL Infra would generate close to ₹1,300-1,400 crore in EBITDA over the next 12-18 months.
Punjab and Sind bank (Mkt. Price: INR 46.80)
The bank is expected to raise funds via issue of Basel III compliant additional tier I up to Rs 1,000 crore and Basel III compliant tier II bonds up to Rs 500 crore in FY 18 in one or more tranches.
GMR Infrastructure Ltd (Mkt. Price: INR 17.75):
The consortium of GMR- Megawide had recently emerged as the preferred bidder for the Clark Airport project in Philippines. The consortium was declared as the bidder with the ‘lowest calculated responsive bid’, after passing the post-qualification evaluation phase of the competitive bidding. The company is expected to greatly benefit due to the government focus on infrastructure.
Other Penny Stocks to look at for the first quarter of FY 18 are Panama Petrochem Ltd, Basant Agrotech (India), Ltd., Time Technoplast Ltd., Rashtriya Chemicals and Fertilisers ltd (RCF), Rural Electrification Corporation ltd. (REC), Punjab and Sind bank, etc.