Top IT Penny Stocks: Investors of large IT stocks got burnt recently due to the global slowdown. Newly listed tech companies like Paytm and Nykaa gave serious blows too, reaching lower lows every other day. Some investors came down a step for mid-cap IT stocks. A few, even considered penny IT stocks eying multi-bagger gains to offset recent losses.
In this article, we talk about the top IT penny stocks in India that risk-taking investors can add to their watchlists.
We’ll eventually get around the much sought ‘top IT penny stocks’ list. But before that, for starters, let us know what is a penny stock.
What is a penny stock?
A penny stock is the stock of a small-cap company, usually having a market value of less than Rs 500 crore. Additionally, it is said that penny stocks have low share prices, below Rs 85 or so. The scrip can trade for as low as Rs 1 or 50 paise a piece.
They have relatively lesser liquidity and can come with added restrictions of delivery only, no margin trading, and more.
Risk-taking investors are always on the lookout for penny stocks in the hope of bagging multi-bagger gains. However, penny stocks often go bust as often as they go up. Investors must exercise extreme caution while investing in penny stocks.
List of Top IT Penny Stocks in India
So without further ado, let us quickly jump to know about the top IT penny stocks on BSE and NSE.
Top IT Penny Stocks #1 – Cambridge Technology Enterprises
|CMP||₹59.5||Market Cap (Cr.)||₹117|
|Face Value||₹10.00||Book Value||₹49.4|
|Promoter Holding||46.9%||Price to Book Value||1.20|
|Debt to Equity||0.45||Dividend Yield||0.00%|
|Net Profit Margin||8.75%||Operating Profit Margin||15.10%|
Cambridge Technology Enterprises is over 2-decade old technology and outsourcing group that provides services to midsize companies. It is based out of Hyderabad, India with a marketing and support presence in the US.
It offers a broad range of IT services including SaaS application development, big data & analytics, AI / ML development, cloud transformation & management, IoT & mobility, and DevOps & infrastructure management.
The company caters to clients in industries such as BFSI, manufacturing, telecommunication, entertainment, logistics, healthcare, rapid prototyping, energy, retail, and more.
Its revenues have remained upwards of Rs 100 crore in the last three years. For the financial year ended 2022, it reported a net profit of Rs 12 crore, up 33.33% from Rs 9 crore a year before that.
The stock presently trades at a lucrative P/E of 9.16 and price to book value ratio of only 1.20. The company has a low debt-to-equity ratio of 0.45. As for the stock returns, the shares of Cambridge Technology Enterprises have appreciated at a CAGR of 37.75% over the last three years.
Top IT Penny Stocks #2 – Intense Technologies
|CMP||₹72||Market Cap (Cr.)||₹162|
|Face Value||₹2.00||Book Value||₹45|
|Promoter Holding||18.1%||Price to Book Value||1.63|
|Debt to Equity||0.00||Dividend Yield||0.56%|
|Net Profit Margin||23.0%||Operating Profit Margin||29.8%|
Powered by over 500 skilled workforces, Intense Technologies is a global enterprise software products and services company. It is headquartered in India with a strong and growing presence in the USA, Latin America, Europe, the Middle East, Africa, and the Asia-Pacific region.
Its range of solutions centers around digital customer engagement. Its products enable enterprises to offer consistent and personalized customer communication and implement digital transformation.
Its UniServe™ NXT platform comes with AI, application development, process automation, cloud, and more such capabilities. Its suite assists Fortune 500 companies with customer onboarding, customer engagement hub, B2B customer experience, and more such activities.
The shares of the technology have compounded at an annual rate of 39.01% in the previous three years. Intense Technologies offers a high RoCE of 28.3% and a likewise high RoE of 22.2%. It has no debt and currently trades at an attractive P/E ratio of 8.29. However, the stock has a low promoter shareholding of 18.1% only.
Top IT Penny Stocks #3 – Airan
|CMP||₹18||Market Cap (Cr.)||₹225|
|Face Value||₹2.00||Book Value||₹8.6|
|Promoter Holding||72.4%||Price to Book Value||2.09|
|Debt to Equity||0.05||Dividend Yield||0.00%|
|Net Profit Margin||8.16%||Operating Profit Margin||13.60%|
Airan traces its origins back to the 1990s when Sandeep Agrawal, the promoter of the company started computer coaching classes. Sensing a huge opportunity ahead, the company slowly ventured into processing IPO applications for public sector banks in 1995.
Over the years, Airan diversified towards MICR clearing, cash management, and IT & IT-enabled services eventually. As of the present date, Airan has a strong presence in information technology (IT) and Information Technology enabled services (ITES).
It offers banking transaction processing services and document management services for telecommunication companies, internet services providers, payment banks, and more such enterprises.
The revenues of the IT penny stock have grown at a CAGR of 14.47% every year from Rs 58 crore in FY20 to Rs 87 crore in FY22. It clocked a net profit of Rs 10 crore in FY22.
It has a high promoter shareholding of 72.4% and presently trades at a slightly high P/E ratio of 22.6.
Top IT Penny Stocks #4 – XT Global Infotech
|CMP||₹31.8||Market Cap (Cr.)||₹422|
|Face Value||₹1.00||Book Value||₹10|
|Promoter Holding||62.8%||Price to Book Value||3.10|
|Debt to Equity||0.41||Dividend Yield||0.00%|
|Net Profit Margin||9.15%||Operating Profit Margin||13.10%|
XT Global Infotech is an established IT, BPO and technology consulting services provider with 23 years of history. It was established in 1998 and has emerged as of of the leading companies in these sub-segments all over the world.
It has more than 600 employees spread across its offices in the USA and India. The company provides Oracle enterprise solutions, automation solutions, software services, AP automation technology, and BPO services.
Its clientele list has high-profile names such as Verizon, Oracle Consulting, Axis Securities, Marriott Bonvoy, and more.
XT Global reported a net profit of Rs 20 crore on revenues of Rs 217 crore in FY22. It has a promoter holding of 62.8%.
The stock presently trades at a P/E ratio of 20.4 giving a market value of Rs 422 crore to the IT company.
Top IT Penny Stocks #5 – Vedavaag Systems
|CMP||₹52.2||Market Cap (Cr.)||₹120|
|Face Value||₹10.00||Book Value||₹51|
|Promoter Holding||36.2%||Price to Book Value||1.05|
|Debt to Equity||0.03||Dividend Yield||1.16%|
|Net Profit Margin||10.4%||Operating Profit Margin||17.0%|
Founded in 1998 as an e-governance company, Vedavaag Systems is a small IT company that operates in the niche segment of citizen services delivery management. Its offerings include financial inclusion, e-governance solutions, cloud-enabled IoT-based AI & ML solutions, retail & logistics and online education services across India.
Vedavaag has a presence in over 18 states in the nation and has partnered with various agencies and PSUs like SBI, BSNL, and more to provide rural citizen services.
The company is also developing niche AI and ML products for critical sectors such as healthcare, education, safety, and security.
Its revenues have consistently grown from Rs 76.20 crore in FY20 to Rs 94.81 crore in FY22. During the same period, its net profit scaled from Rs 6.25 crore to Rs 8.30 crore.
The IT services penny stock has almost nil debt with a debt-to-equity ratio of 0.03. It trades at a P/E of 14.3 and an attractive price-to-book value of 0.98. However, on a cautionary note, the promoter holding is on the lower end of the spectrum at 36.2%.
List of Top IT Penny Stocks
We read bout 5 top IT penny stocks in detail above. The list below highlights more such penny stocks.
|Company Name||Market Cap (Rs Cr)||CMP (Rs)|
|Cambridge Technology Enterprises||117||59.5|
|XT Global Infotech||429||32.2|
|Kellton Tech Solutions||565||58.5|
A short section below highlights the research methodology used for this article.
To write this article, we used the stock screener of the Trade Brains Portal. The research has been restricted to education, hardware and software; the three sub-sectors of the broad IT industry.
As for the market capitalization and current share price, we kept the upper limit of Rs 500 crore and Rs 85 respectively. In addition to this, the debt-to-equity ratio was kept below 1 to avoid any overly-leveraged stocks.
Lastly, the price-to-earnings ratio range was kept between 1 and 50. This helped to filter out moderately profitable companies.
All these parameters left some 25 stocks. For these 25, we have exercised subjective judgment for revenue and net profit growth. Consistency of figures and the amount of available information were also considered for picking top IT penny stocks.
The image below shows a section of the Trade Brains Stock Screener
We are now at the end of our article on top IT penny stocks in India. While penny stocks can be rags-to-riches stories, they can also take away whatever is left. Therefore, investors must consider a variety of factors such as their financial position, allocation, and more before putting money into a penny stock.
How has been your journey with multi-bagger penny stocks? Have you ever found one? How about you let us know in the comments below?
Vikalp Mishra is a commerce graduate from the University of Delhi. He likes to write on finance, money and business. He is a voracious reader with a genuine interest in investing. Drop him a mail at [email protected].
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