Return on Equity (ROE) is a key financial metric that evaluates how effectively a company is generating returns on the investment on the investment received from its shareholders.
A high ROE suggests that a company is effectively utilising its equity base to generate profits, while a low ROE may indicate inefficiencies or poor financial management.
Following are a few penny stocks under Rs. 30 with a high Return on Equity (ROE) of more than 20 percent:
DRC Systems India Limited
With a market cap of Rs. 379.8 crores, the shares of an Information Technology (IT) and software consultancy services provider hit a 5% upper circuit on BSE at Rs. 28.67 on Monday.
The company’s revenue from operations stood at Rs. 15.4 crores in Q1FY25, rising by 116.6 percent YoY from Rs. 7.11 crores in Q1FY24, and the after-tax profit grew by 245.5 percent to Rs. 3.8 crores from Rs. 1.1 crores, during the same period.
In terms of return ratios, DRC Systems India has reported a return on equity (ROE) of 28.4 percent, and a return on capital employed (ROCE) of 30.3 percent.
The company witnessed a net profit margin of 24.34 percent in FY24 decreasing from 26.54 percent in FY23 and an operating margin of 25.95 percent falling from 34.66 percent, over the same period.
The stock has delivered multibagger returns of nearly 120.8 percent in the last one year, and around 99 percent returns year-to-date.
Incorporated in 2012, DRC Systems India Limited is a service company and its principal activities comprise IT and IT-enabled services including web and mobile app development, maintenance, testing and related ancillary services.
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Caspian Corporate Services Limited
With a market cap of Rs. 282.8 crores, the stock surged by nearly 2.2 percent on BSE to hit an intraday high at Rs. 22.9 on Monday.
The company’s revenue from operations stood at Rs. 24.6 crores in Q1FY25, rising by 30.8 percent YoY from Rs. 18.8 crores in Q1FY24, and the after-tax profit grew by 416.6 percent to Rs. 3.1 crores from Rs. 0.6 crores, during the same period.
In terms of return ratios, Caspian Corporate Services has reported a return on equity (ROE) of 34.1 percent, and a return on capital employed (ROCE) of 19.6 percent.
The company witnessed a net profit margin of 8.83 percent in FY24 decreasing from 39.78 percent in FY23 and an operating margin of 12.75 percent falling from 58 percent, over the same period.
The stock has delivered multibagger returns of nearly 167.6 percent in the last one year, as well as around 112.2 percent returns year-to-date.
Caspian Corporate Services Limited, formerly known as Intellivate Capital Advisors Limited, is engaged in the business of providing manpower supply services.
Axita Cotton Limited
With a market cap of Rs. 629.5 crores, the stock surged by 0.5 percent on BSE to Rs. 24.68 on Monday.
The company’s revenue from operations stood at Rs. 155 crores in Q1FY25, declining by 32 percent YoY from Rs. 227.8 crores in Q1FY24, and the after-tax profit fell by 38.6 percent to Rs. 3.5 crores from Rs. 5.7 crores, during the same period.
In terms of return ratios, Axita Cotton has reported a return on equity (ROE) of 34.8 percent, and a return on capital employed (ROCE) of 37.9 percent.
The company witnessed a net profit margin of 1.84 percent in FY24 decreasing from 3.08 percent in FY23 and an operating margin of 2.55 percent falling from 4.19 percent, over the same period.
The stock has delivered positive returns of nearly 23 percent in the last one year, but around 9.8 percent of negative returns year-to-date.
Established in 2013, Axita Cotton Limited is engaged in the business of manufacturing, trading, processing and finishing of cotton bales.
Written by Shivani Singh
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