Fundamentals refer to a company’s or asset’s financial strength and performance. They reveal information about a company’s ability to generate profits and manage debt. Earnings, revenue, debt-to-equity ratio, net profit margin, ROE, and ROCE are all important fundamental factors.
Penny stocks are shares of small publicly traded companies that trade at extremely low prices on stock exchanges. Because they are not widely traded, their potential gains are usually determined by sharp spikes in market volatility. Because of their lack of liquidity, penny stocks can be risky to invest in.
Here are some fundamentally strong penny stocks
Airan
Airan Ltd is in the IT and ITeS business for Banking Transactions Processing Services, Document Management Services, Payment Banking, and so on.
On Thursday’s session company’s shares opened at Rs 22.40 per share, a 0.5 percent increase over its previous close of Rs 22.28. The company has a market capitalization of Rs 281 crores.
Looking at the company’s financial statements operating revenues rose 8.2 percent from Rs 21.74 crore in Q2FY23 to Rs 23.54 crore in Q2FY24, Furthermore, net profit increased 26 percent from Rs 2.27 crore to Rs 2.87 crore during the same period.
The company has reduced its debt by 0.04 in the last 3 years, reported a Return on Equity (ROE) of 9.8 percent, a Return on capital employed (ROCE) of 12.7 percent, a Net profit margin of 11, and the company has a low price-to-earnings ratio of 25 compared to its peers.
The shares of Airan have risen by 30 percent in the last six months and 33 percent in the year to date.
Axita Cotton
Axita Cotton, founded in 2013, is in the business of manufacturing, trading, processing, and finishing cotton bales.
On Thursday’s session company’s shares opened at Rs 36.65 per share, a 3.2 percent increase over its previous close of Rs 35.51. The company has a market capitalization of Rs 712 crores.
Looking at the company’s financial statements operating revenues rose 324 percent from Rs 91.64 crores in Q2FY23 to Rs 388.77 crores in Q2FY24, Furthermore, net profit increased 183 percent from Rs 2.29 crores to Rs 6.5 crores during the same period.
The company has maintained zero debt for the last 2 years, reported a Return on Equity (ROE) of 38 percent, a Return on capital employed (ROCE) of 52 percent, a Net profit margin of 11, and the company has a low price-to-earnings ratio of 30 compared to its peers.
The shares of Axita Cotton have risen by 29 percent in the last six months however, the company share price was negative last year.
HOV Services
HOV Services Ltd, founded in 1989, works in the Business Process Outsourcing Industry.
On Thursday’s session company’s shares opened at Rs 58 per share, a 0.8 percent decrease over its previous close of Rs 58.50 The company has a market capitalization of Rs 73.5 crores.
Looking at the company’s financial statements operating revenues rose 44 percent from Rs 2.98 crore in Q2FY23 to Rs 4.29 crore in Q2FY24, Furthermore, net profit decreased 55 percent from Rs 1.58 crore to Rs 0.71 crore during the same period.
The company has maintained a low debt-to-equity ratio of 0.2, reported a Return on Equity (ROE) of 17 percent, a Return on capital employed (ROCE) of 20 percent, and a Net profit margin of 37 percent.
The shares of Airan have risen by 17.7 percent in the last six months and 20.6 percent in the year to date.
Written by Sriram KV
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