Last Updated – December 2020
In this article, we will cover,
– What is an ultra-penny stock
– Why do they trade so cheap
– Things to keep in mind while determining the best stocks to buy below 10 rupees
– A comprehensive list of the best stocks to buy under Rs 10
– A model watchlist comprising 4 to 5 best stocks to buy below 10 rupees
– Portfolio companies
Stocks that trade at extremely low prices fall in the category of ultra-penny stocks.
In the context of the Indian stock market, stocks that trade at prices below Rs10 fall in the category of ultra-penny stocks
What is an ultra-penny stock?
These stocks are lesser-known to larger investing public as investors remain away from them because the information regarding their fundamentals and businesses is either not reliable or not available. However, they are also known for multi-bagger returns within certain trading sessions.
As these stocks are illiquid sometimes only a few orders can lead to hitting the circuit limit on the exchange. These stocks mostly give higher returns when hitting circuits for a number of days. Though this period of hitting circuit is not accompanied with trading volumes, either there is some story moving around that stock or it might be a result of manipulation by some stock operators who artificially inflate the price and volumes to bring in innocent retail investors and then later offload their own holdings when participation increases.
Why do they trade so cheap?
Ultra-penny stocks trade at such low rates for a reason because the larger investing public doesn’t even care about them and look to exit sooner or later once they have given decent returns. They are often found non-compliant with exchange regulations and are not transparent. It is only when there is some news or turnaround event that ultra-penny stocks move. The speculation leads to an increase in trading volumes and prices soar. But very few of them turn out to be true or genuinely fundamentally stronger. Any negative news causes the price to turn south.
Things to keep in mind while determining the best stocks to buy below 10 Rupees
People who generally trade in ultra-penny stocks are the lower class of retail investors who do not keep a portfolio approach and invest in them based on news or tip from some friends, thinking the price is already beaten down too much and they will not lose much but if that turns out to be true it will double or triple their capital. However, investors should always keep in mind that they might be investing in small amounts but still they can lose 100 percent of their capital.
The risk an ultra-penny stock will go bust is equally high. The company can suddenly shut down or there can be very less probability for its going concern. The capital that deserves to be invested in ultra-penny or penny stocks should not be more than 2 to 3 percent of a person’s portfolio value.
Summary Table for best stocks to buy below 10 Rupees
|Sr. No||Company Name||BSE Scrip Code||NSE Symbol||CMP (Rs.) 4th Dec||Rating(Stars)||Industry|
|2||Opto Circuits India||532391||OPTOCIRCUI||5.85||0.5||HOSPITALS & MEDICAL SERVICES|
|3||Reliance Communications||532712||RCOM||1.7||0.5||TELECOMMUNICATIONS – SERVICE|
|4||GTL Infrastructure||532775||GTLINFRA||0.5||0.5||TELECOMMUNICATIONS – EQUIPMENT|
|6||Jaiprakash Power Ventures||532627||JPPOWER||2.65||0.5||POWER – GENERATION & DISTRIBUTION|
|7||HCL Infosystems||500179||HCL-INSYS||9.85||0.5||COMPUTERS – HARDWARE|
|8||Sanwaria Consumer||519260||SANWARIA||1.4||0.5||PERSONAL CARE|
|9||Jaiprakash Associates||532532||JPASSOCIAT||4||0.5||INFRASTRUCTURE – GENERAL|
|10||Shree Renuka Sugars||532670||RENUKA||9.95||0.5||SUGAR|
|11||TRIDENT||521064||TRIDENT||9.2||0.5||TEXTILES – SPINNING – COTTON BLENDED|
|12||Mahanagar Telephone Nigam Ltd||500108||MTNL||10.15||0.5||TELECOMMUNICATIONS – SERVICE|
|13||Dish TV India||532839||DISHTV||10.95||0.5||MEDIA & ENTERTAINMENT|
|14||DB Realty||533160||DBREALTY||16.9||0.5||CONSTRUCTION & CONTRACTING – REAL ESTATE|
|16||Vodafone Idea||532822||IDEA||9.75||0.5||TELECOMMUNICATIONS – SERVICE|
|17||Hindustan Construction Company||500185||HCC||6.80||0.5||CONSTRUCTION & CONTRACTING – CIVIL|
|20||Sical Logistics||520086||SICAL||10.05||0.5||TRANSPORT & LOGISTICS|
Investing in ultra-penny stocks is always on speculation. First of all, investors should avoid investing in them and if they buy any it should be treated as buying a lottery. You should never become emotionally attached to them in the hope of some good news.
Investors should also never follow a buy and hold approach even if they have got good returns recently. Because over a period of time neither they are able to generate value for shareholders nor follow a transparent reporting system. Investors should also research extensively about the stock and the news going on in the public domain and not become the victim of operators’ conspiracy, who later offload their holdings after manipulating the price.
The transaction cost for some ultra-penny stocks is also higher and on some the brokerage is charged on a per-share basis. Similarly, when stocks trade at a very low price, the spread between the bid and ask price also turns out to be significant in terms of percentage.
The stocks mentioned in the watchlist are keeping in mind news, speculation, bullish trend in their price chart and a few fundamental factors such as debt to equity ratio and cashflows. But this information will vary on a day to day basis depending on the news flow and an investor should make some relevant background checks in his capacity before investing in these stocks.
Dish TV India
Dish TV is India’s biggest and amongst the world’s largest direct-to-home (DTH) Company with a subscriber base of more than 29 million. The Company is part of the Essel Group. Dish TV has on its platform more than 655 channels & services including 40 audio channels and 70 HD channels & services. Dish TV leverages multiple satellite platforms including NSS-6 Asiasat-5 SES-8 GSAT-15 and ST-2 and has a bandwidth capacity of 1422 MHz the largest held by any DTH player in the country.
The Company has a vast distribution network of over 4000 distributors & around 400000 dealers that spans across 9450 towns in the country. Dish TV is connected with its pan-India customer base through call-centres that are spread across 22 cities and are equipped to handle customer queries in 12 different languages. The company has a good dividend yield of 6.8 percent and a good debt to equity ratio of 0.26. The stock has been moving within a range of 3.8 to 10 for the last one year.
Sintex Industries, also known as The Bharat Vijay Mills Ltd, is the world’s largest producer of plastic water tanks and Asia’s largest manufacturer of corduroy fabrics. Sintex operates in Europe, America, Africa, and Asia, especially in France, Germany, and the US. It primarily works with building material solutions, textile solutions and custom molding solutions.
Sintex manufactures plastic products such as prefabricated structures, industrial custom molding products, monolithic construction and water storage tanks. The company also makes men’s shirts. The company has a good debt to equity ratio of 0.47 and for the last two years the stock is consolidating within a range of 0.55 to 3.
Jaiprakash Power Ventures
Jaiprakash Power Ventures Limited is engaged in the generation of power, including hydro and thermal; cement grinding; captive coal mining, and transmission of power. The Company owns and operates a 400 megawatt Jaypee Vishnuprayag Hydro Electric Plant at District Chamoli, Uttarakhand; a 1,320 MW Jaypee Nigrie Super Thermal Power Plant at Nigrie, Singrauli district, Madhya Pradesh, and a 500 MW Jaypee Bina Thermal Power Plant at Sirchopt village, Sagar district, Madhya Pradesh.
The Company is engaged in operating Cement Grinding Unit, which has a capacity of two metric tons per annum (MTPA) at Nigrie, Singrauli district, Madhya Pradesh, and is also engaged in Captive coal mining operations at Amelia Coal Block for supply of Coal to Jaypee Nigrie Super Thermal Power Plant. Jaiprakash Power is operating a 660 MW Thermal Power Plant through Prayagraj Power Generation Company Limited, which is a subsidiary of the company, at Bara, Allahabad District. The company has a good debt to equity ratio of 0.57 and for the last two years stock is moving in a range of 0.35 to 3.50.
Trident Limited is a leading manufacturer of Yarn Bath Linen Bed Linen Wheat Straw-based Paper Chemicals and Captive Power. The Company has state-of-the-art manufacturing facilities in Barnala (Punjab) and Budni (Madhya Pradesh). Trident has a strong clientele in 100 countries across the globe. The Company had two subsidiaries – Trident Global Corp Limited the Indian wholly owned subsidiary and Trident Europe Limited the overseas wholly owned subsidiary.
Trident Global Corp Limited majorly serves as the Retail Arm of the Company. It is the face of the Company in the domestic markets. Further Trident Europe Limited provides the proximity to the European Markets & enhances the Brand Presence of the Company. The company’s Yarn plant which produces both cotton and acrylic yarn is located at Sanghera Punjab. Its products are used in hosiery products, textiles fabrics etc. The company has a good dividend yield of 5.58 percent and a good debt to equity ratio of 0.66. The broader trend for the stock is up and stock has been moving within a range of 3.50 to 7.50 since the last two years.
Vodafone Idea Ltd
Vodafone Idea Limited is an Aditya Birla Group and Vodafone Group partnership. It is India’s leading telecom service provider. The Company provides pan India Voice and Data services across 2G, 3G and 4G platforms. The company is in news regarding its payment for AGR dues. The Supreme Court of India has reserved its order in the adjusted gross revenue (AGR) case.
Vodafone Idea has sought 15 years to repay their dues to the government and if granted the company will be able to survive and prices will witness an immediate upmove. Any negative news will create a doubt on its going concern since its cashflows are slowly depleting and debt is mounting. Competition from peers such as Reliance Jio and Airtel is a major blow to Vodafone’s business as it is losing subscribers by the day. The next hearing has been scheduled for August as the apex court sought to know about the collateral which the companies can provide in case of timeline extension, if granted.
On other good news, The Solicitor General of India on behalf of the government accepted the telcos’ proposal for securing the dues by taking the allocated spectrum as security. Vodafone can be on a speculator’s radar, however, it is extremely risky and volumes should be closely observed before buying this stock. The stock has been moving within a range of Rs 3 to 12 since the last two years.
Watch our video on how to analyse and pick stocks below Rs 10 for investments
Model ultra-penny Stocks Watchlist
If one wants to bring down the list to 4 to 5 stocks for closely tracking then the below table is suitable for a beginner as of December 2020.
|Sr. No||Company Name||BSE Scrip Code||NSE Symbol||CMP (Rs.) 4th Dec|
|2||Jaiprakash Power Ventures||532627||JPPOWER||2.65|
|4||Dish TV India||532839||DISHTV||10.95|
Detailed overview of the Best stocks below Rs 10 to buy now in India
The table below covers some of the most important factors while evaluating Best stocks below Rs 10 such as the return ratios – RoE, operating margins, sales and earnings growth, market cap, etc.
|Sr. No||Company Name||BSE Scrip Code||NSE Symbol||CMP (Rs.) 4th Dec||Rating
|Industry||PE ratio||Dividend Yield||ROCE||ROE||Debt equity ratio||5 yr CAGR revenue||5 yr CAGR PAT|
|2||Opto Circuits India||532391||OPTOCIRCUI||5.85||0.5||HOSPITALS & MEDICAL SERVICES||–||0||1.66||-1.04||–||-31.5||–|
|3||Reliance Communications||532712||RCOM||1.7||0.5||TELECOMMUNICATIONS – SERVICE||–||0||-7.41||–||–||-41.6||–|
|4||GTL Infrastructure||532775||GTLINFRA||0.5||0.5||TELECOMMUNICATIONS – EQUIPMENT||–||0||-6.2||–||–||18.8||–|
|6||Jaiprakash Power Ventures||532627||JPPOWER||2.65||0.5||POWER – GENERATION & DISTRIBUTION||–||0||2.63||-24.3||0.55||-3.62||–|
|7||HCL Infosystems||500179||HCL-INSYS||9.85||0.5||COMPUTERS – HARDWARE||–||0||0.47||-481||–||-25.4||7.27|
|8||Sanwaria Consumer||519260||SANWARIA||1.4||0.5||PERSONAL CARE||–||0||-117||-2918||–||2.56||–|
|9||Jaiprakash Associates||532532||JPASSOCIAT||4||0.5||INFRASTRUCTURE – GENERAL||–||0||2.63||-24.3||0.55||-3.62||–|
|10||Shree Renuka Sugars||532670||RENUKA||9.95||0.5||SUGAR||–||0||339||–||–||-13.5||24.2|
|11||TRIDENT||521064||TRIDENT||9.2||0.5||TEXTILES – SPINNING – COTTON BLENDED||24.8||3.83||10.2||11.3||0.28||4.82||23.6|
|12||Mahanagar Telephone Nigam Ltd||500108||MTNL||10.15||0.5||TELECOMMUNICATIONS – SERVICE||–||0||-17.6||–||–||-14.2||-6.21|
|13||Dish TV India||532839||DISHTV||10.95||0.5||MEDIA & ENTERTAINMENT||4.9||0||10.2||5.87||0.19||5.76||163|
|14||DB Realty||533160||DBREALTY||16.9||0.5||CONSTRUCTION & CONTRACTING – REAL ESTATE||–||0||-2.67||-18.2||1.26||-8.48||–|
|16||Vodafone Idea||532822||IDEA||9.75||0.5||TELECOMMUNICATIONS – SERVICE||–||0||-5.44||-132||–||7.33||–|
|17||Hindustan Construction Company||500185||HCC||6.80||0.5||CONSTRUCTION & CONTRACTING – CIVIL||–||0||35.4||–||–||-1.84||17.8|
|20||Sical Logistics||520086||SICAL||10.05||0.5||TRANSPORT & LOGISTICS||–||0||-4.72||-24.4||1.56||6.77||–|
Other links you may find useful:
- Our Collection of Best Stocks to Buy
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