The PEG ratio, which stands for Price/Earnings-to-Growth, compares a company’s Price-to-Earnings (P/E) ratio to its expected rate of growth. When the PEG ratio is below 1.0, it suggests that investors may be paying less per unit of earnings growth, making the stock potentially undervalued.
Penny stocks are quite popular with small investors because of their potential for huge gains. These stocks are priced very low and such companies have low market capitalization as well. These stocks are often illiquid, meaning they are traded in lower quantities compared to other stocks. While there is a perception that penny stocks can offer high returns.
Listed below are such penny stocks having a PEG less than 1:
Teesta Agro Industries Ltd
With a market capitalization of Rs. 53.9 crores, the shares of the fertilizers manufacturing company started Friday’s trading session on a flatter note at Rs. 94.60. During the trading session, the shares hit a high of Rs. 97.50, gaining around 2 percent and closed the day at Rs. 95.50 apiece.
Looking at the company’s financial performance, the revenue decreased by around 22 percent from Rs. 48.13 crores during the December quarter to Rs. 37.90 crores in the March quarter. On a contrasting note, the net profits zoomed by 414 percent from Rs. 51 lakhs to Rs. 2.62 crores during the same timeframe.
In terms of key financial metrics, the company reported a Return on Equity (RoE) of 3.62 percent and a return on capital employed (RoCE) of 4.98 percent for the period spanning FY23-24. Further, the net profit margin during FY23-24 was at 2.47 percent.
Moreover, the share is considered to be undervalued as the PE ratio stands at 13.4 times compared to the industry average of 27.3 times and the PEG ratio stands at 0.28 times, which means the market has underestimated its value with its projected earning potential.
Seacoast Shipping Services Ltd
With a market capitalization of Rs. 226 crores, the shares of the logistics services providing company started Friday’s trading session on a higher note at Rs. 4.23, gaining around 1 percent compared to its previous close of Rs. 4.18 and closed the day at Rs. 4.13 apiece.
Coming onto the company’s financial statements, the revenue zoomed by 347 percent from Rs. 27.99 crores during the December quarter to Rs. 125.02 crores in the March quarter. On the other hand, the net profits magnified by 10,614 percent from Rs. 7 lakhs to Rs. 7.50 crores during the same period.
In terms of key financial metrics, the company reported a Return on Equity (RoE) of 15.94 percent and a return on capital employed (RoCE) of 24.57 percent for the period spanning FY23-24. Further, the net profit margin during FY23-24 was 5.42 percent.
Moreover, the share is considered to be undervalued as the PE ratio stands at 11.1 times compared to the industry average of 21.6 times and the PEG ratio stands at 0.03 times, which means the market has underestimated its value with its projected earning potential.
Bizotic Commercial Ltd
With a market capitalization of Rs. 41.7 crores, the shares of the textile company started Friday’s trading session on a higher note at Rs. 51 compared to its previous close of Rs. 49.31. During the trading session, the shares hit a high of Rs. 51.90, gaining around 6 percent and closed the day at Rs. 51.89 apiece.
Looking at the company’s financial statements, the revenue zoomed by 76 percent from Rs. 25.84 crores during H1FY24 to Rs. 45.58 crores in H2FY24. In addition, the net profits surged by 185 percent from Rs. 80 lakhs to Rs. 2.28 crores during the same period.
In terms of key financial metrics, the company reported a Return on Equity (RoE) of 5.63 percent and a return on capital employed (RoCE) of 8.46 percent for the period spanning FY23-24. Further, the net profit margin during FY23-24 was 4.31 percent.
Moreover, the share is considered to be undervalued as the PE ratio stands at 13.6 times compared to the industry average of 57.8 times and the PEG ratio stands at 0.15 times, which means the market has underestimated its value with its projected earning potential.
Written By Vaibhav Patil
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