The index is at near 34,000 points and any investment in small stocks under Rs 100, can always be risky. However, here are a few stocks that are under Rs 100 and could be worthy picks. A few stocks like Orchid Pharma maybe excellent picks on likely takeover.
However, some are classic turnaround stories and could generate tremedous wealth in the next few years. Here are a few stocks under Rs 100 that one should buy from a 2-3 year perspective.
Orchid Pharma is among the top 15 pharma companies in the country. The company's API unit and formulation unit are both approved by the US FDA. Apart from this the company also has approval for its plans from the UK regulator, MHRA and also the European Directorate of Quality of Medicines.
This means the company can export approved products to some of the best markets across the globe.
Orchid Pharma at the moment has presence in anti-infectives, cardio vascular segment, nutraceuicals, central nervous system, anti-inflammatory etc. It has plants for API and dosages. There is one big trigger for the stock, which might propel the shares higher and let us see that.
Orchid Pharma: The big trigger
Orchid Pharma continues to make losses and due to its debt, proceedings were initiated against the company by the National Company law Tribunal under the corporate insolvency resolution process. According to reports there are major Indian pharma companies that are likely to acquire an interest in Orchid Pharma. Among these include very big names in the Indian pharma industry.
Apart from this there are also very renowned global private equity players who are prospective suitors for the company. The one big reason for the interest is that the debt of the company is not too high and it has very sound manufacturing facilities, that have received approval from global health regulators. In fact, the company recently got approval from the US FDA for Olanzapine Tablets.
We believe if a buyout takes place this stock could well be a multibagger. However, it can also be a high risk bet as well. Check stock quote of Orchid here
Gujarat Themis Biosyn became India's first Company to start commercial production of Anti-tuberculosis drug Rifampicin. Over the last few quarters the company has done reasonably well. The company's major products include Rifamycin-S an intermediate for "Rifampicin" on treatment of Tuberculosis (TB) and Lovastatin.
Cost control measures last year and improved product performance led to a sharp recovery in the financial performance of the company, which resulted in net profits of Rs 4.24 crores for 2016-17. The company has largely been a turnaround story.
Gujarat Themis: Very small equity capital
For the quarter ending June 30, 2017, the company reported a net profit of Rs 91 lakhs on a small equity capital of Rs 7.21 crores. This translates into an EPS of Rs 0.63. For the full year 2017-18, the company can report an EPS of Rs 2.8. The stock therefore is valued at just around 15 times earnings.
The shares of the company are listed only on the Bombay Stock Exchange. A small equity and low public holding would bring more volatility to the stock. A good share to buy from a long term view for the markets.
A word of caution in this stock is that it has just rallied from Rs 55 to Rs 59. So, one needs to wait for dips before buying into the stock.
Reliance Home Finance is a stock that was carved out off Reliance Capital. This stock got listed at Rs 114 and had fallen since to Rs 75. However, it is back at Rs 98 currently.
At the time of listing most brokerages had estimated the stock to list around Rs 120, which would be 3 times anticipated book value for 2018 of Rs 40. However, the shares of Reliance Home Finance have fallen consistently and at these levels they look very attractive.
One of the top reasons to recommend this stock would be the home finance business, which is itself growing at a rapid pace of 20 per cent. This leaves immense potential to cater to a growing market for the company.
The management of the company had recently said that it plans to increase its book size to a staggering Rs 50,000 crores in the coming years. The book size at the moment is around Rs 13,000 crores. Going ahead this should augur well for Reliance Home Finance.
Check stock quote of Reliance Home Finance
Valuations of Reliance Home Finance
The stock of Reliance Home Finance is barely traded at 2 to 2.5 times anticipated book value. This is much lower than peers like Gruh Finance, Repco Home or even any of the larger players like HDFC, PNB Housing Finance, Dewan Housing Finance, Indiabulls Housing Finance etc.
This leave tremendous scope for Reliance Home Finance in terms of valuations. Sentiments for ADAG group stocks have been positive on account of RCom's plans to sell its assets to Reliance Jio. This provides an opportunity for long term investors to enter the stock.
A list of small cap stocks that you can buy
We have also in the past recommended some small and mid cap stocks that you should own. These have the potential to generate good returns in the coming years. Read by clicking on the links below:
Taxation on shares below Rs 100
It is important to note that if you sell your shares at a profit before one year, you are liable to pay taxes and its does not matter whether your shares are under Rs 100 or not.
Short term capital gains tax on shares is applicable if you sell your shares before one year. On the other hand, if you sell your shares after a period of one year, there is no tax that is applicable. So, you need to factor the same before you sell your shares.
It is advised that if you are making a decent sum you can also pay the required taxes on the same. There are roumours that the Union Budget 2017-18 could also consider a change in the norms for how capital gains is charged. So far we do not know of any such move. Will have to wait and watch.
The article is not a solicitation to buy, sell in securities or other financial instruments mentioned in the article. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and do not accept culpability for losses and/or damages arising based on information in this article.
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