The Piotroski score is a score between zero to nine that gives an idea about a firm’s financial position. This score considers factors such as a company’s profitability, liquidity, operating efficiency, cash flows, and debt situation. A score of zero is the lowest, while nine is the highest.
Here are three penny stocks with a high Piotroski Score:
Shyam Century Ferrous Ltd
Shyam Century Ferrous Ltd is engaged in the manufacturing of ferroalloys, mainly in North-Eastern India. The company has an ideal debt-to-equity ratio of 0.04 and an excellent return on equity of 38.83%. Its shares were trading at ₹ 18.65 apiece and it has a market capitalization of ₹ 395 crores. Its promoters hold a 51.70% stake in it.
The company made a net profit of ₹ 57 crores in the year that ended on March 31, 2022. Its shares were trading at a price-to-earnings ratio (P/E) of ₹ 10.10, which is lower than the industry P/E of 11.32, indicating that the stock might be undervalued as compared to its peers. It has a Piotroski Score of 8.00.
Vishwaraj Sugar Industries Ltd
Vishwaraj Sugar Industries is engaged in the production of sugar, and alcoholic spirits by distillation including ethanol, vinegar and generation of power. The company has an ideal debt-to-equity ratio of 0.93 and a good return on equity of 23.66%. Its shares were trading at ₹ 15.95 apiece and it has a market capitalization of ₹ 302 crores. Its promoters hold a 66.22% stake in it.
The company made a net profit of ₹ 38 crores in the year that ended on March 31, 2022. Its shares were trading at a price-to-earnings ratio (P/E) of 4.75, which is significantly lower than the industry P/E of 17.67, indicating that the stock might be undervalued as compared to its peers. It has a Piotroski Score of 8.00.
Airan Ltd
Airan Ltd is engaged in the business of IT and ITeS for Banking Transactions Processing Services, Document Management Services, payment banking and so on. The company has an ideal debt-to-equity ratio of 0.05 and a return on equity of 10.06%. Its shares were trading at ₹ 16.05 apiece and it has a market capitalization of ₹ 202 crores. Its promoters hold a 74.42% stake in it.
The company made a net profit of ₹ 10 crores in the year that ended on March 31, 2022. Its shares were trading at a price-to-earnings ratio (P/E) of ₹ 20.40, which is significantly lower than the industry P/E of 24.17 indicating that the stock might be undervalued as compared to its peers. It has a Piotroski Score of 8.00.
It is important to note that penny stocks are very risky stocks. They trade at low prices and are prone to pump-and-dump schemes. They have a low market capitalization and are mostly illiquid.
Written by Simran Bafna
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