5 Fundamentally Strong Penny Stocks You Can Consider For Long-Term Investing
Nagarjuna Agrichem Limited (NACL), the small-cap company established in 1994 from the pesticides and agrochemicals sector, is currently priced at Rs. 73.35. The stock’s 52-week low / high was Rs. 36 / 89. The company manufactures agrochemical active ingredients.
The company has proven to be a trustworthy entity in the agricultural segment and largely derives income from the domestic market, despite exporting its product line to several countries.
NACL Industries, unaffected by the outbreak of the pandemic, has shown consistent revenue growth with revenues for the year 21 at Rs. 1191 cr. against Rs. 846 cr. Fy 2018. After intermittent drop in net profit between FY17 and FY20, the company reported Rs. 50 cr. Net profit in fiscal year 21 exceeded Rs. 31 crore in fiscal year 2017.
The average dividend payout ratio for the 3 year period was 9.3%. The debt-to-equity ratio was maintained at 0.44, recording a steady decline since 2018.
Other major strengths of the company include a strong supply chain, a broad product portfolio, good customer base, sound finances and a diverse geographic reach.
Limited international conveyors:
The company operates in 3 main segments including conveyor belts – where it manufactures and markets PVC conveyor belts, wind power – where the company generates, supplies and sells wind power (electricity) and the business segment – responsible for business, financing and administrative activities. The conveyor belts produced by the company are used to transport coal, cement, etc. in underground mines. The company derives its main revenue from exports with clients served outside the country such as Mosaic, BeltTech, etc. In India, the company targets Shree Cement, Coal India, Tata Steel, among others.
Over the past 3 years, the revenue registered a 23.7% CAGR growth. While amid an increase in export orders, the company’s revenue increased in FY21 to reach Rs. 169 cr. against Rs. 85 cr. in Fy19, recording steady growth in revenues.
Even profits have recorded a CAGR growth of 42.8% over the past 3 years. After working to reduce its debt, the company is now a debt-free entity. The average dividend payout of the company over the past 3 years is 18.6% and with improving financial results we can expect more dividend consistency. For fiscal year 2021, the company declared a dividend of 100% of Rs. 1 per share.
Speaking of its main strength, stable order book, lower competition in the domestic market, reputable customer base are the main drivers of the performance of the company.
NBCC (India) Ltd:
The PSU company in the Infrastructure space is specialized in project management, EPC and real estate consulting. After declining net profit in fiscal year 2020, the company recorded a sharp increase in net profit to Rs. 236 crore in fiscal year 21. Net profit for the September quarter of fiscal year 22 has more than doubled sequentially to reach Rs. 65.64 crore. The company’s net sales also saw an increase over the same period to reach Rs. 1,302 crore sequentially.
The company has been a debt free business for over 13 years. Major PSU has had a strong track record in dividend distribution since 2007 and, in fiscal 2021, offered a dividend of 47%.
NBCC India has a strong track record of paying consistent dividends since 2007. The company will also be included in the list of entities to be privatized as the center prepares to privatize or liquidate all CPSEs in “non-core sectors” one by one. .
This is another infra space PSU company that specializes in global engineering consulting and an EPC entity. The company mainly provides project management services in sectors such as infrared, solar and nuclear energy, water and waste management, fertilizers, oil and gas.
The company’s revenue in fiscal 2021 was Rs. 3,144 crore, down from the previous fiscal year due to the pandemic outbreak. Over the past 3 years, i.e. between 2018-2021, the company’s revenue has grown at a CAGR of 7%. However, over the past 2 quarters, the company has consistently experienced a decline in operating revenue.
On the net profit margin front, its 3-year average margin was 12.3%. In addition, the company has a long history of dividend payment, with an Fy21 payout of 40% Rs. 2 / share as a dividend making it a dividend yield of 2.77%. The average dividend over 3 years is 61.9%.
This company classified as a Navratna entity is also a debt free company with surplus cash status.
As a recent development, the company is also making a foray into the green technology space as it has established an alliance with Chempolis, Finland, to convert biomass into green fuels in the country.
Gujarat Mining Development Corporation:
The concern of mining and mineral processing is to produce lignite and fluorspar. The 2 grade fluorspar offered by the company finds use in industries such as steel, foundry fluxes, welding electrodes, aluminum, etc. In addition, the company is also involved in energy and mining projects.
Stocks below Rs. 10 that turned into multibaggers
With the exception of the latest Fy21, where it posted a net loss of Rs. 41 crore, the company has never recorded any losses and has in fact maintained consistency despite declining profits during the period. During the previous financial year the company posted a net profit of Rs. 202 crore.
Likewise, revenue has also been successful since fiscal 2018.
However, its debt on equity being zero can be a good bet because it offers more security to shareholders with less risk. Since 1997 the company has distributed good dividends and for the last fiscal year it declared a dividend rate of 10% or Rs. 0.2 per share.
Currently, the stock is trading at an attractive P / B value of 0.56.
|Penny Stock||LTP||52 weeks L / H||Debt to equity from financial year 21|
|NACL Industries||Rs. 73.35||Rs. 36/89||0.44|
|International conveyors||Rs. 67.2||0.3|
|CNBC||Rs. 46.7||Rs. 26/60||0|
|Engineers India||Rs. 72.15||Rs. 67.65 / 93.3||0|
|Mineral from Gujarat||Rs. 71.40||Rs. 45.3 / 83.35||0|
Note that investing in penny stocks is subject to market risk and caution should be exercised due to the high risk involved. Neither the author nor Greynium Information technologies Pvt Ltd are responsible for any losses incurred based on any decision made from this article.