Top NBFC Penny Stocks in India: The headline reads, “Penny stock turns multi-bagger.” We realize after reading the news that it is no longer a penny stock. A novice investor keeps hoping to buy low-quotation stocks or a value-hunter among small-caps. One thing is clear: such stocks can be a rags-to-riches story.
How do you go about picking profitable companies from this risky pool? What filters should I use: revenue growth, profitability, debt-to-equity ratio, or something else? In this article, we bring to you the top penny NBFC stocks. So without further ado, let us jump in.
Table of Contents
Top NBFC Penny Stocks in India
Top NBFC Penny Stocks in India #1: Sakthi Finance Ltd
Sakthi Finance was established in 1955, headquartered in Pollachi, as the Pollachi Credit Society Private Limited. Sakthi Finance was started with the intent of catering to the hire-purchase requirements of the TELCO dealerships of the Sakthi Group.
Over the past six decades, the business has transitioned and grown into one of the leading NBFCs in South India, specializing in financing the purchase of commercial vehicles and construction equipment. The company has a presence of more than 50 branches in the Southern states of Andhra Pradesh, Karnataka, Kerala, Tamil Nadu, and Telangana
During the financial year 2022–23, it disbursed Hire Purchase Advances to the extent of Rs 821.52 crore, as against Rs 596.66 crore in the previous financial year 2021–22. The gross stage 3 assets of the company stood at 5.8% as of March 2023. Its provision coverage ratio on stage 3 assets stood at 51%.
The company’s financial statements reported a 5.2% increase in revenue from operations, from Rs. 175.67 crore in FY22 to Rs. 184.77 crore in FY23. The net profit stood at Rs 12.49 crore, increasing 31% from Rs 9.52 crore in FY22. The 3-year average RoCE and RoE stand at 9.86% and 5.33%, respectively.
| Particulars | Amount | Particulars | Amount |
|---|---|---|---|
| CMP (Rs) | ₹ 78.6 | Market Cap (Cr.) | ₹ 569.22 Cr |
| EPS(TTM) | 2.13 | Stock P/E | 27 |
| RoE (%) | 6.57% | RoCE (%) | 9.89% |
| Promoter Holdings (%) | 67.02 | FII Holdings (%) | 0 |
| Debt to Equity | 5.3 | Price to Book Value | 1.77 |
| Operating Margin (%) | 68.8 | Net Profit Margin (%) | 6.51 |
Top NBFC Penny Stocks in India #2: Baid Finserv Limited
Baid Finserv Limited (formerly known as Baid Leasing and Finance Company Limited). It is a non-deposit-taking NBFC carrying out the business of providing car loans, commercial vehicle loans (new and used), MSME loans, loans against property, and other asset-backed loans.
The company has deeply penetrated the semi-urban and rural areas with its 40 branch offices in Rajasthan and has started operations in Madhya Pradesh. It has targeted providing loans to the underserved in semi-urban and rural areas as there is a lack of bank credit and the market is more or less unorganized.
Baid Finserv’s portfolios include NBFCs, PSUs, and banks like SBI. UCO Bank. IDFC First Bank, Shriram Finance, Chola, Tata Capital, etc.
The company’s financial statements reported a 9.8% increase in revenue from operations, from Rs 49.94 Cr in FY22 to Rs 54.85 Cr. in FY23. The net profit stood at Rs 55.73 crore, increasing 11.3% from Rs 50.05 crore in FY22. The 3-year average RoCE and RoE stand at 9.86% and 5.33%, respectively.
| Particulars | Amount | Particulars | Amount |
|---|---|---|---|
| CMP (Rs) | ₹ 26.5 | Market Cap (Cr.) | ₹ 340.51 Cr |
| EPS(TTM) | 1.14 | Stock P/E | 21.4 |
| RoE (%) | 8.42% | RoCE (%) | 10.67% |
| Promoter Holdings (%) | 34.8 | FII Holdings (%) | 0 |
| Debt to Equity | 1.19 | Price to Book Value | 1.79 |
| Operating Margin (%) | 61.4 | Net Profit Margin (%) | 18.6 |
Top NBFC Penny Stocks in India #3: Capital Trade Links Ltd
Capital Trade Link was incorporated in 1984 in New Delhi, India, and is a non-deposit-accepting, non-banking financial company registered with the Reserve Bank of India. It obtained a certificate of registration in 2001. In 2017, it was registered as a mutual fund distributor and also started financing vehicle loans.
CTL is an organization providing monetary advantage to individuals and organizations in low, medium, and high ranges that require finance. Similarly to banks, it extends credit facilities to individuals and business entities, whether proprietorships, partnership firms, companies, or any other legal entity. The money is advanced for both personal and commercial purposes.
Capital Trade Links diversified its funding sources by adding seven new lenders in FY23, including the leading PSU Bank, i.e. the State Bank of India, taking the total lender count to 21 as of March 2023.
During the financial year 2022–23, its asset portfolio increased by Rs 101 crore as against Rs 42 crore in the previous financial year 2021–22 to Rs 143 crore in FY23. The gross stage 3 assets of the company stood at 2.3% as of March 2023. Its provision coverage ratio on stage 3 assets stood at 13%.
The company’s financial statements reported a 78% increase in revenue from operations, from Rs. 7.83 crore in FY22 to Rs. 14 crore in FY23. The net profit stood at Rs 2.50 crore, increasing 1.2% from Rs 2.47 crore in FY22. The 3-year average RoCE and RoE stand at 9.46% and 7.88%, respectively.
| Particulars | Amount | Particulars | Amount |
|---|---|---|---|
| CMP (Rs) | ₹ 47.48 | Market Cap (Cr.) | ₹ 292.52 Cr |
| EPS(TTM) | 0.64 | Stock P/E | 59.3 |
| RoE (%) | 8.14% | RoCE (%) | 8.08% |
| Promoter Holdings (%) | 40.28 | FII Holdings (%) | 0 |
| Debt to Equity | 3.03 | Price to Book Value | 4.83 |
| Operating Margin (%) | 58.3 | Net Profit Margin (%) | 14.8 |
Top NBFC Penny Stocks in India #4: Emerald Finance Ltd
Incorporated in 1983 Emerald Finance Limited (formerly Emerald Leasing Finance and Investment Company Limited) is an NBFC registered with the RBI in 2018 engaged in the business of commission income, interest income, and dividends.
It offers a spectrum of banking products and financial services, especially to traditionally underserved customers, focusing on micro, small, and medium enterprises (“MSMEs”) and retail customers through a variety of delivery channels.
Emerald has entered into an agreement with Rainpay India Pvt. Ltd. (“Rain”), which is a wholly-owned subsidiary of the American company Rainpay Technologies Inc. This partnership has enabled it to diversify its portfolio by entering the salaried employee segment and providing loans linked to the salary of the customer. These loans are low-ticket in nature and provide the company with high volumes every month.
It mainly funds known and credit-worthy clients. Mostly these clients are such with whom it had long relationships. The effectiveness of this marketing strategy can be seen from the fact that it had very negligible bad debt from the recently sourced portfolio. In FY23, Emerald reached 33 states and UTs and served more than 11,000 people. Salary advances worth INR 18 crore were processed.
The company’s financial statements reported a 36% increase in revenue from operations, from Rs 8.46 crore in FY22 to Rs. 11.51 crore in FY23. The net profit stood at Rs. 3.45 crore, increasing 40% from Rs. 2.47 crore in FY22. The 3-year average RoCE and RoE stand at 12.5% and 8.92%, respectively. The promotor’s holdings increased from 33.12% in FY18 to 67.80% in FY23.
| Particulars | Amount | Particulars | Amount |
|---|---|---|---|
| CMP (Rs) | ₹ 25.9 | Market Cap (Cr.) | ₹ 61.64 Cr |
| EPS(TTM) | 1.39 | Stock P/E | 16.4 |
| RoE (%) | 9.26% | RoCE (%) | 12.06% |
| Promoter Holdings (%) | 67.8 | FII Holdings (%) | 0.071 |
| Debt to Equity | 0.2 | Price to Book Value | 1.55 |
| Operating Margin (%) | 51.4 | Net Profit Margin (%) | 30.6 |
Top NBFC Penny Stocks in India #5: Comfort Fincap Ltd
The Comfort Group was founded by Mr. Anil Agrawal (CA, ICWA) in 1994. The group is a well-diversified financial services organization available on all the essential platforms like BSE, NSE, MCX, MCX-SX, Merchant Banking (category 1), and nonbanking finance activities covering primary markets, investment solutions, debt services, capital markets, equity, derivatives, currency derivatives, depository services (CDSL), project financing, wholesale financing, and other segments to the client community.
Comfort Fincap Ltd. was incorporated in 1982 and is registered as a non-systemically important non-deposit non-banking finance company. It is focused on providing inter-corporate loans, personal loans, loans against shares and securities, loans against properties, mortgage loans, home loans, trade financing, bill discounting, trading in shares and securities, and arbitrage business in the stock and commodity markets.
The company’s financial statements reported an 18% increase in revenue from operations, from Rs 12.42 crore in FY22 to Rs 14.66 crore in FY23. The net profit stood at Rs 4.88 crore, an increase of 10% from Rs 4.42 crore in FY22. The 3-year average RoCE and RoE stand at 12.6% and 10.4%, respectively.
| Particulars | Amount | Particulars | Amount |
|---|---|---|---|
| CMP (Rs) | ₹ 10.81 | Market Cap (Cr.) | 60.6 |
| EPS(TTM) | 0.99 | Stock P/E | 11.2 |
| RoE (%) | 10.1% | RoCE (%) | 13.41% |
| Promoter Holdings (%) | 55.09 | FII Holdings (%) | 1.57 |
| Debt to Equity | 0.49 | Price to Book Value | 1.13 |
| Operating Margin (%) | 76.9 | Net Profit Margin (%) | 33.3 |
Other NBFC Penny Stocks in India
| Company | Market Cap(Cr) | Current Price (Rs) |
|---|---|---|
| UY Fincorp Ltd. | ₹ 591.83 Cr | ₹ 27.11 |
| Standard Capital Markets Ltd. | ₹ 445.41 Cr | ₹ 3.21 |
| Mangalam Industrial Finance Ltd. | ₹ 581.79 Cr | ₹ 5.02 |
| Reliance Capital Ltd. | ₹ 297.69 Cr | ₹ 12.35 |
| Mercantile Ventures Ltd. | ₹ 310.13 Cr | ₹ 25.39 |
| India Finsec Ltd. | ₹ 178.61 Cr | ₹ 74.5 |
| Advik Capital Ltd. | ₹ 170.41 Cr | ₹ 3.25 |
| The Motor & General Finance Ltd. | ₹ 159.75 Cr | ₹ 39.05 |
| ACME Resources Ltd. | ₹ 157.84 Cr | ₹ 50.14 |
Conclusion
This article covered some of the top NBFC penny stocks. Such small-cap companies hold the potential to offer multi-bagger returns. However, they can also result in heavy losses for the shareholders as their stock prices are very volatile. Thus, investors should approach such companies with caution. Understanding risk and return characteristics and suitability is also important.
As a retail investor, what investment approach do you follow? Do you prefer small-cap, mid-cap, and large-cap companies, or keep a balance between them? Let us know in the comments below.
Written by Ashish Agarwal
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