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. Here are some of the best stocks under Rs 50, which we believe have the potential to make money in the coming days.
Sanwaria Consumer is a stock that is quoting at just Rs 13.50. This company has had a fantastic performance for the quarter ending March 31, 2018.
Net Profit for the period increased by 133.36 per cent to Rs 35.69 crores from Rs 15.2 crores in FY 2016-17.
Diluted EPS of the Company stood at Rs. 1.36/- for the FY 2017-18 against Rs. 0.60/- for FY 2016-17.
Sanwaria Consumer is gradually making a mark in the FMCG business. It has now shifted its focus to Basmati rice, which now constitutes around 52 per cent of its turnover in 2017-18. This is as against a contribution of 74 per cent for soya meal in 2014-15. Now, there are a number of reasons to be buying the shares of the company and let us examine each of these.
1) The company is coming out with a preferential issue of shares to reduce the debt burden.
2) Sanwaria Consumer has entered into an agreement with "Patanjali Ayurved Limited" to manufacture and supply Soya Chunks or Soya Bari under the "Patanjali Brand."
3) The company is looking to the recent tie-up of Patanjali with online platforms or virtual marketing networks like Flipkart, Amazon, Bigbasket, Grofers
etc. SCL Products may hence be available on these online platforms.
4) At Rs 13.50, the shares of Sanwaria Consumer available at a p/e of just under 10 times. This is cheap for an FMCG stock that has the potential to generate more revenue in the years to come. It's important to note that the stock has a face value of Re 1.
SCL has aggressive plans of setting-up its own stores, several of which it has already established. This is a Rs 5,000 crores turnover company, whose shares are not very expensive.
South Indian Bank
If you are looking to invest in banking stocks, that have the potential to generate returns in the long term, South Indian Bank should be a good bet. The bank is likely to focus on retail lending and has been gradually improving performance in this area. The CASA growth and control of non performing assets at the bank has also been pretty decent.
South Indian Bank can report an EPS of close to Rs 2 for FY 2018-19. The stock is trading at a p/e of just 12 times one year forward earnings. This is a private sector bank that definitely deserves better discounting. This makes the stock a good bet at the current level. Buy for long term capital gains.
Zee Learn is among India's top education company with the fastest growing chain of K-12 schools - Mount Litera Zee School and Asia's No 1 chain of pre-school network - Kidzee in its portfolio.
It also operates the Zee Institute of Media Arts (ZIMA), a TV and Film training institute in Mumbai that offers diploma courses in Direction, Acting, Sound, Editing, Production and Cinematography. Zee Learn also has Zee Institute of Creative Art (ZICA) a full-fledged Classical and Digital Animation Training Academy.
Zee Learn: Stock has potential to rally
Zee Learn has aggressive plans to expand and capitalize to cater to the needs of the education sector.
The company also has a very asset light model. Recently, Zee Learn ventured into manpower recruitment and training through one of its subsidiaries. It is likely that Zee Learn will post strong growth in the coming quarters on account of the many initiatives that it is taking.
The company can post an EPS of Rs 3 by 2018-19. If we value the company at a 20 p/e the stock should trade at Rs 60. This means an upside of at least 30 per cent over the current levels.
Exercise some caution
It is best to exercise some degree of caution, as the stocks recommended may or may not be fundamentally the best. Stocks under Rs 50 are generally small cap stocks, whose price can be extremely volatile. In some case the downside risk is very low, given the huge destruction already in the stock. Remember, if you hold for a longer period of time, there maybe some possibility of making money. We have also recommended some small cap stocks here
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.
The author and his family own some of the shares mentioned above, at the time of writing this article.