Whenever we talk about penny stocks people get excited. Young investors saw in a way that they can buy greater amounts of stocks in smaller amounts of money. In the USA, the stocks which are trading below 75 rupees are called penny stocks.
Some of the people in India consider a stock as a penny stock when it is traded below 10 rupees. But we will consider the stocks as penny stocks which are at present trading below 100 rupees.
Selection of the Stock
Some people thought there are very few opportunities in penny stocks and these stocks have high volatility and insider trading goes on. They are partially true. So we take so many cautions before selecting the penny stock which we will discuss today .
After studying a lot of companies, we choose a stock of a company which is fundamentally strong and less risky compared to other penny stocks. We choose a company which has more than 1000 crore rupees market capitalization along with debt to equity ratio is 1 or below 1. ROE of the company is more than 10 percent along with atleast 15 percent CAGR in sales.
About the company
This company is involved in the Electric vehicle segment. We all know many experts are very much bullish in EV stocks. But the other companies who are involved in the electric vehicle segment are trading atleast more than 100 rupees. This is one of the few stocks which is below 100 rupees and directly involved in the EV sector. So if you are bullish in EV, you can consider investing in this stock.
This company is already making significant moves to make vehicles of India pollution free. They are providing some of the innovative technologies to the bigger vehicle manufacturer companies in exchange for high monetary value. For this the stock price is going up and up for the last few years.
The PE ratio of this company is 332.05 but the debt to equity ratio is zero which means the company is totally debt free. If we talk about profitability, the return on equity is 11.28 percent along with a net profit margin of 4.62 percent.
In the last 5 years, this company has seen high sales growth of 190 percent in their business. The stock price is presently trading at 75. This company has given a 66.17% CAGR in the last 5 years.
If we analyse this stock according to the technical sides, we can see that the present price is a little bit lower than the 200 day Moving Average. It means this company’s stock can see little down trend.
This company has RSI or relative strength value of 42 percent which shows that there is no significant movement in the price of this stock. So a bearish trend can be seen in this stock for a short time. But this company is very strong if we see its fundamentals so you can definitely give a thought of investing in this company.