First the warning: the stocks that are being recommended are not necessarily fundamentally strong. Some of these are saddled with debt, but, there could be some hopes of debt reduction, takeover or a turnaround story. Here are a few cheap stocks to buy in India and hold for 2018, though some are not penny stocks on account of their face value.
The stock was recently in the news as one of India's top notch investors had picked a stake of 1 per cent in the company. What is interesting about the company is that it has managed to reduce its debt after a sale of some of its cement assets to Ultratech for Rs 16,500 crores.
It will now bring down its debt further after a land bank arrangement with its debtors. In all probability the debt would come down to Rs 6,000 crores. There would still be some potential landbank that the company holds in Noida and Greater Noida.
It is important to note that the debt of JP Associates would have come down from Rs 30,188 crores as on March 31, 2017 to Rs 6,000 crores.
Reasons for optimism at JP Associates
The company would have fewer assets now to generate revenues. However, interest costs would also reduce due to debt repayment. Another reason for the optimism is that the company for the first time reported a net profit for the first time in 12 quarters in the period ending June 30, 2017.
Jaiprakash Associates would now largely depend on its EPC business to power revenues. The company has a substantial order book and is looking to touch a turnover of Rs 6,000 crores from this stream in 2019-20.
Should that materialize we could see the stock moving ahead in the coming days. There is no doubt there is an element of risk in the stock, but, also an opportunity. This is a cheap penny stock at Rs 18. Check Stock quote of Jaiprakash Associates here
KCP Sugars is among the better sugar stocks to own. It has two manufacturing facilities in Andhra Pradesh and also engages in Extra Neutral Alcohol, Ethanol, Incidental Cogeneration of Power, Organic Manure, Mycorrhiza Vam, Calcium Lactate and CO2.
The company has had a superb financial performance for the quarter ending June 30, 2017, when net profits jumped to Rs 11.29 crores from a loss in the previous quarter. KCP Sugars performed even better for the period ending Sept 30, 2017, when its net profits rallied to Rs 22 crores.
The company has a good track record of paying dividends and if the dividends like last year are retained the stock would be available at a dividend yield of near 3 per cent.
KCP Sugars: A good bet
The share price of the company has fallen from levels of Rs 42 to Rs 32. The stock is also trading near book value levels. We believe that sugar prices would continue to remain robust in the coming years.
KCP Sugars is a very old sugar manufacturer and has the potential to deliver. Investors with a long term perspective can buy this stock.
Reliance Communications (RCOM)
For those willing to take a risk, RCOM is also a cheap low priced stock. However, the company is heavily saddled with debt of near Rs 45,000 crores. For the stock to turn a multibagger many things have to work simultaneously.
Among these include the successful sale of the tower business to Brookefield. Apart from this the sale of land bank that it owns.
However, it is not going to be that easy for Reliance Communications. The margin squeeze through cut throat competition would mean further erosion in margins. However, if some of the things mentioned above do work, the stock could be on fire.
This is a low priced penny stock that could rally in the future.
RCOM: Chinese lenders a worry
Chinese lenders have now filed for insolvency proceedings against RCOM. The stock has once again rallied after reports that these lenders are now willing to take 70 per cent stake in the Dhirubhai Ambani Knowledge city. As and when news emerges this stock tends to rally. Recently, on a single day the shares jumped 40%.
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