Top Stocks to buy Under Rs 20 in India

Exploring the Indian stock market can be quite rewarding, offering a diverse range of options. Within this market, there are stocks that promise high returns, those with budget-friendly prices, and some that combine both aspects. Particularly intriguing are stocks valued at less than 20 rupees, constituting a popular category. This avenue presents an excellent opportunity to engage with the stock market, offering favorable returns while requiring only a modest investment.

While stocks can be a profitable venture, they also carry inherent risks. Hence, for individuals seeking a stock market entry point that doesn’t demand a substantial capital outlay, considering the acquisition of stocks priced below 20 rupees might be prudent.
The chief advantage of investing in these stocks lies in their affordability, coupled with a multitude of benefits for investors.

Notably, these companies provide the potential to generate profits over time through the appreciation of stock prices.In essence, purchasing shares from such companies today could yield the opportunity to sell them later at a price exceeding the initial purchase cost.

Within this blog post, we’ll delve into an analysis of the most encouraging Stocks to buy Under Rs 20 in India, offering valuable insights for potential investment deliberations.

Factors considered for the selected Stocks to Buy Under Rs 20

Considering the significant position held by the Stocks to buy Under Rs 20 in India, it’s imperative to consider specific factors when contemplating potential investment options.

We have curated the following list of Stocks to buy Under Rs 20 in India based on the following factors:

1. Market Cap

We have chosen only those Stocks to buy Under Rs 20 whose market cap is greater than 5 Crore INR.

2. Price to Earning Ratio

Typically, a stock’s price-to-earnings ratio tends to decrease as its performance improves.

3. Sales

We have selected the following Stocks to buy Under Rs 20 with an Average Sales Growth (3 years) of more than 10%.

4. Profit

The following list consists of Stocks to buy Under Rs 20 whose Average Profit growth (3 years) > 10%.

Top Stocks to Buy Under Rs 20 to buy in India

Siddha Ventures Ltd

Established in 1991, Siddha Ventures Ltd operates within the realms of share trading, investment, and broking activities. The company’s primary focus lies in investments and trading, involving both quoted and unquoted equities, as well as broking or sub-broking. Other financial service activities, excluding insurance and pension funding, also contribute to the company’s operations. It’s important to note that Siddha Ventures Ltd exclusively conducts business within India.

A notable development in the company’s trajectory was its voluntary delisting, as Siddha Ventures Ltd applied for the delisting of its listed securities, a request that was approved by SEBI. Consequently, the company’s securities were delisted from the official exchange list starting January 29th, 2021. During a certain period, the trading of the company’s shares had been suspended, a suspension that was lifted by BSE Limited on April 28th, 2020.In terms of revenue, Siddha Ventures Ltd encountered challenges in generating revenue from its operations in the fiscal year 2021. The company relied mainly on Other Income, particularly income stemming from Commission & Brokerage, as its revenue source. This unique revenue makeup underscores the company’s distinctive financial situation.

• Market Cap – ₹ 7.45 Cr.
• Current Price – ₹ 7.45
• High / Low – ₹ 9.04 / 3.50
• Stock P/E – 0.31
• Book Value – ₹ 39.9

The company maintains nearly zero debt, with its stock trading at 0.17 times its book value, demonstrating its undervaluation. Notably, the company has achieved robust profit growth with a 50.0% CAGR over the past five years, coupled with a commendable return on equity (ROE) track record, notably achieving 37.1% ROE over three years. Furthermore, the company’s debtor days have shown significant improvement, decreasing from 592 days to a mere 59.9 days. However, despite consistently reporting profits, the company has refrained from distributing dividends, and its low promoter holding stands at 5.76%.

Modern Steels Ltd

Founded in 1974, Modern Steel Ltd. specializes in crafting low-alloy and carbon-steel-rolled products that cater to a wide spectrum of vehicles, from commercial trucks and tractors to passenger vehicles and two-wheelers. Additionally, the company serves engineering enterprises with its product offerings. The company’s portfolio includes Alloy Bars/Rounds and Non-Alloy Bars/Rounds within its steel-rolled products.

A significant strategic move occurred during the 46th Annual General Meeting held on December 28, 2020, where the company greenlit the transfer and sale of its steel business, heat treatment business, and auto component business through a slump sale arrangement. This transition, facilitated by a business transfer agreement (BTA), led to the creation of a wholly owned subsidiary, Arjas Modern Steel Private Limited (formerly Arjas Steel Private Limited), with the transfer process culminating on January 5, 2022. Furthermore, the company has faced financial implications due to non-compliance with the proposed terms of a One one-time settlement (OTS) with Punjab National Bank. This breach has resulted in the non-provisioning of interest amounts totaling Rs. 117 lakh for the quarter ending March 31, 2021, and Rs. 592 lakh for the fiscal year ending March 31, 2021, thus impacting the company’s financial results to a corresponding extent.

• Market Cap – ₹ 24.91 Cr.
• Current Price – ₹ 18.16
• High / Low – ₹ 22.1 / 10.6
• Stock P/E – 1.10
• Book Value – ₹ 9.32

The company successfully decreased its debt burden and has achieved a commendable 21.3% compound annual growth rate (CAGR) in profits over the past five years. However, despite consistently reporting profits, it has refrained from distributing dividends, and the seemingly low tax rate raises some concerns. Moreover, the fact that the promoters have pledged their entire holding and the inclusion of other income amounting to Rs. 14.8 Crores are noteworthy considerations.

Gagan Gases Ltd

Established in 1986, Gagan Gases specializes in the distribution and marketing of LPG (liquefied petroleum gas).Initially serving as an authorized distributor for ESSO and MOBIL branded Automotive and Industrial Lubricants in the Madhya Pradesh region, the company’s current focus has shifted. Gagan Gases is currently engaged in LPG cylinder filling for Reliance Petro Marketing Ltd.

In addition, the company also sells LPG in its own cylinders. The services provided by Gagan Gases encompass various aspects of LPG, including domestic and industrial usage, LPG cylinder testing facilities, and bulk LPG/propane transportation services. Notably, the company operates a LPG Bottling Plant located in Dhar, Madhya Pradesh. In terms of revenue distribution, in the fiscal year 2021, approximately 88% of the revenue was generated from the sale of products, while the remaining 12% stemmed from the sale of services, specifically Cylinder Test Shop receipts.

• Market Cap – ₹ 6.55 Cr.
• Current Price – ₹ 17.85
• High / Low – ₹ 16.4 / 9.50
• Stock P/E – 3.83
• Book Value – ₹ 6.62

The company has successfully lowered its debt, accompanied by a strong return on equity (ROE) performance, achieving an impressive 45.6% ROE over three years. Additionally, the company’s debtor days have shown significant improvement, reducing from 56.6 to 36.3 days. However, despite consistent profit generation, the company is not distributing dividends, and its promoter holding is at a modest 36.0%. It’s important to note that the earnings encompass an additional income of Rs. 2.36 Crores. Conversely, there’s a drawback in the form of increased working capital days, which have expanded from 204 days to 431 days.

Promact Impex Ltd

Established in 1985, Promact Impex Ltd specializes in the import and export of a wide spectrum of commodities including agro products, minerals, and metals, among others. Its diverse portfolio ranges from fertilizers, chemicals, cement, and polymers to textiles, machinery, automobiles, and various packaging activities, such as wrapping paper bundles and grain packing.

However, the company has currently suspended its operational activities and is reliant on alternative sources of income, such as trading and interest income, to sustain its operations. Remarkably, in the fiscal year 2021, the company’s revenue was derived primarily from non-product sources, with around 97% of the revenue attributed to Godown Rent, while the remaining 3% was split between Interest Received on Fixed Deposit Receipts (FDR) and Interest Income. This unique revenue distribution underscores the company’s current operational strategy and financial situation.

• Market Cap – ₹ 4 Cr.
• Current Price – ₹ 6.45
• High / Low – ₹ 10.4 / 2.60
• Stock P/E – 4.67
• Book Value – ₹ -4.39

The company has effectively lowered its working capital needs, demonstrating a remarkable decrease from 1,134 days to 71.2 days. However, despite this positive development, the company has experienced a considerable decline in sales growth, recording -26.9% over the last five years. Moreover, the company’s promoter holding stands at a modest 39.0%, and it’s noteworthy that the company grapples with high debtor days, totaling 1,049 days, which can impact its liquidity and cash flow management.

Galactico Corporate Services Ltd

Galactico Corporate Services Ltd operates as a Category-I SEBI Registered Merchant Banker, offering an array of financial services including Investment Banking, Transaction Advisory, Valuation, and Business Modeling services. The company’s financial offerings encompass IPO/Rights Issue/FPO services, Corporate Valuations, Mergers-Amalgamations, Corporate Advisory, Open Offers/Buy Backs/Delisting, Placement, Capital Market Services, ESOP Advisory & Management, and Secretarial Compliances.

Additionally, Galactico Corporate Services Ltd has diversified its business portfolio, engaging in packaged drinking water manufacturing through its subsidiary, Seven Hills Beverages Limited, and providing pest control services to corporate entities, societies, and households through its subsidiary, Palwe Pest Control Private Limited. As of March 31, 2021, the company operates with three subsidiaries: Seven Hills Beverages Limited, Palwe Pest Control Private Limited, and Instant Finserve Private Limited.

• Market Cap – ₹ 90.4 Cr.
• Current Price – ₹ 6.07
• High / Low – ₹ 48.6 / 4.73
• Stock P/E – 9.69
• Book Value – ₹ 1.98

The company has achieved impressive profit growth with a 54.9% CAGR over the past five years and maintains a strong return on equity (ROE) track record, recording 25.8% ROE over three years. Furthermore, the company has successfully reduced its debtor days from 47.8 to 33.5 days. Despite its consistent profitability, the company has chosen not to distribute dividends, and its promoter holding has experienced a decline of -7.59% over the last quarter, indicating changes in ownership structure.

Cyber Media (India) Ltd

Established in 1982, Cyber Media (India) Ltd engages in an extensive range of activities spanning print media and publishing, digital marketing, content creation, analytics, and management consultancy.The company holds a significant position as South Asia’s largest specialty media house and ranks among India’s top five magazine brands. Within its media business segment, Cyber Media operates a comprehensive portfolio consisting of 12 media properties such as Dataquest, PCQuest, Voice&Data, Global Services, DQ Channels, and DQ Week across major Indian cities.

Additionally, the company manages 12 websites, notably including www.CIOL.com, a prominent technology business website. Noteworthy services provided by the company encompass digital offerings, with its online community, CIOL, serving as a prolific content generator for the IT industry, reaching more than 1.5 million business decision-makers through 12 properties accessible on tablet platforms like Zinio and Magzter, as well as mobile phones. In the print domain, Cyber Media covers publications related to Indian IT, Telecom, BioTechnology, Innovation, and Entrepreneurship. Furthermore, the company’s CyberMedia Research (CMR) arm specializes in market research, consulting, and advisory services. Extending its influence, Cyber Media (India) Ltd conducts nearly 100 events each year, spanning a wide array of topics encompassing IT, Telecom, BioTechnology, as well as Innovation and Entrepreneurship within its event division.

• Market Cap – ₹ 26.5 Cr.
• Current Price – ₹ 16.9
• High / Low – ₹ 26.9 / 12.7
• Stock P/E – 10.8
• Book Value – ₹ -2.93

The company has made commendable progress in reducing its debt, showcasing a commitment to financial stability. Furthermore, it has achieved a substantial 23.9% compound annual growth rate (CAGR) in profits over the last five years, demonstrating its resilience and strategic acumen in navigating market dynamics. However, it’s worth noting that the reported earnings include a noteworthy component of other income, amounting to Rs. 6.39 Crores, which adds a layer of complexity to the company’s financial landscape and warrants careful evaluation for its sustainability and impact on overall profitability.

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FAQs

What are the potential hazards associated with investing in stocks priced below 20 rupees?

Among the hazards associated with investing in stocks below the Rs20 threshold are the risks of volatility, triggering stop losses, making ill-advised decisions, encountering elusive profits, and grappling with regulatory compliance challenges.

Can I engage in investing in stocks under 20 rupees through a brokerage or online platform?

Certainly, you have the option to pursue either avenue. However, it’s noteworthy that numerous brokers and online platforms tend to impose higher margins on these low-priced stocks due to the inherent risks involved.

What kind of long-term growth potential can be expected from stocks under 20 rupees?

The long-term prospects of such stocks are largely contingent upon the specific stock in question. Nonetheless, the potential for substantial growth exists, particularly for stocks of commendable quality.

How can I effectively track my investments in stocks priced below 20 rupees?

To effectively monitor your investments in sub-Rs 20 stocks, it’s essential to not only track price fluctuations but also keep a vigilant eye on trading volumes, market trends, trading behaviors, relevant news updates, and exchange filings. By adopting this approach, you can navigate the landscape of stocks under 20 rupees, while also accessing valuable insights from the sub-20 Rs share price list, which can aid in the assessment of the best-performing stocks in this range.

List of Top Stocks to Buy Under Rs 20 to buy in India

Conclusion

Engaging in the stock market offers a lucrative opportunity for wealth accumulation, yet delving into stocks priced below Rs 20 requires careful consideration, though it’s certainly feasible. The initial step involves identifying stocks with low valuations that also exhibit promising potential.

Participating in stock market trading presents an avenue for capital growth, albeit with inherent risks. While there’s a plethora of low-priced stocks available, discernment is key. The aforementioned compilation highlights the most favorable sub-Rs 20 shares to contemplate for investment. Penny stocks under Rs 20 entail a nuanced approach, encompassing both advantages and disadvantages. Thorough research is imperative, and it’s crucial for investors to align their stock choices with their individual risk tolerance and financial aspirations. This tailored approach delineates the path to acquiring shares below the Rs 20 mark, as encapsulated in the typical list of sub-Rs 20 stocks. By adhering to these principles, one can identify the most suitable stocks within the under-20 Rs range.

Author: Vedanti KiranVedanti is a female finance writer, currently pursuing her studies at Hansraj College. She has a passion for writing and travelling, and her articles on the stock market, finance, investment, and cryptocurrency are well-researched and informative. With her unique perspective on the world of finance, Vedanti is a go-to source for those seeking insights into the world of finance.