High Risk, High Return Stocks Under Rs 50

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Lower share prices, need not necessarily be the best and investors should know, that there are risks. Having said that, there are also stocks that can give good returns over the more long term. We warn investors, that these are high risk stocks, and invest in them, if you have an appetite for risk. Most of these stocks are under Rs 50.

IDFC Bank

This stock is not exactly below Rs 50, but, somewhat near Rs 57. The bank is a well managed private sector bank and is available at decent valuations. In fact, IDFC Bank has fallen from levels of Rs 84, which it rallied too recently to the current levels of Rs 57. The bank has its non performing assets well under control, unlike government owned banks where the numbers are all over the place. If you are prepared to hold the stock for about 5 years it could give very good returns.

Dr Morepen Lab

Dr Morepen makes the famous "Burnol brand". There are reports that the company may now sell its over the counter products, to the Ajay Piramal Group. Over the past few quarters, the company has not been able to churn out impressive results.

For the quarter ending March 2017, the company reported a net profit of Rs 7 lakhs. The stock can be a good bet, if there is robust cash proceeds from the same to the Ajay Piramal Group. We are not so sure of the deal though.

Shares of Morepen Labs were last trading at Rs 19 on the NSE.

 

Dena Bank

This is one PSU Banking stock that has been languishing for sometime now. We believe that the next few quarters would see performance recovery from government owned banks. There are also talks that the smaller banks like Dena Bank would be merged with the larger government owned banks. If this happens we could see a fresh rally in government owned banks. Now a bad bet at the current market price of Rs 33. On a fundamental basis this stock looks risky given the huge mounting losses at the bank.

Gammon India

Gammon India is associated with some of the finest construction projects including the Construction of the foundations of the iconic Gateway Of India, Mumbai in 1919. It also constructed the longest railway tunnel in Asia for Konkan Railway at Ratnagiri, The longest urban flyover at Hebbal for the Bangalore Development Authority - 5.3km, Terminal building for Sharjah International Airport and a host of other projects, which are prestigious.

Recently, the stock surged after the National Highways Authority of India, awarded the company some orders.

At Rs 8 the stock has the potential for an upside, as the government's development agenda, will help the company, particularly in roadways and infrastructure.

Corporation Bank

This stock is currently trading at Rs 50. We like the stock for a number of reasons. The first is that non performing assets of the banking sector may have peaked.

Secondly, there has been capital infusion in government sector banks and lastly there is likely to be a turnaround in performance of public sector banks.

Yes, the bank has seen a spike in NPAs like most other banks, but, we expect that situation to improve in the next 2-3 years, by which time you may not get the shares at the current levels.

A good buy if you want to hold the shares for 2-3 years.

 

HCC

Hindustan Construction is like Gammon India and has built some of the finest projects in the country, including the iconic Bandra-Worli sea link, first Thermal power plant in Mumbai, first water treatment plant in Mumbai, first underground power house in Bihar, first port impounded dock in West Bengal, first nuclear power project. The list of firsts to the company's name are plenty.

Recently, the company said that it can reduce debt by half, after the company allowed arbitration awards to be settled quickly.

This would halve its debt, which would see profits shoot-up sharply. Not a bad bet at Rs 37.60.

 

Bank of Maharashtra

Bank of Maharashtra is another play on the PSU banking space on hopes that non performing assets at some stage would see a sharp improvement. The stock at Rs 31, has very little downside risk. If you are ready to invest for 3 years, this stock could give good returns. Once again this is on hopes that there would be consolidation in the banking industry and merger of smaller banks with the larger ones.

Disclaimer

The article is not a solicitation to buy, sell in securities or other financial instruments. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and the author do not accept culpability for losses and/or damages arising based on information in this article.

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