Investing

One important principle of building a stock portfolio is maintaining balanced diversification. While large-cap and blue-chip stocks generally bring stability, mid-cap, and small-cap stocks are added to increase the chances of potential growth and higher gains. Penny stocks are another category of stocks considered for higher growth potential.

What are penny stocks? These are low-priced stocks, usually trading below Rs.50 per share, with a small market capitalization. These stocks are often illiquid and carry high investment risks due to limited information disclosure, large bid-ask spreads, and lower trading volumes. While they require minimal capital, they are highly speculative and prone to sudden price fluctuations, making them attractive to traders seeking high-risk, high-reward opportunities. 

This article will examine the top penny stocks under 5 Rs and understand what factors to consider when investing in the top 10 shares under 5 Rs.

Top NSE Penny Stocks Under Rs.5:

Based on the December 2024 quarter’s financial results, here are the top penny stocks under Rs.5 as of 18th February 2025-

Name	Price Rs.	Mar Cap Rs.Cr.	NP Qtr Rs.Cr.	NP 12M Rs.Cr.	Net worth Rs.Cr.	P/E	Ind PE	ROCE %	1Yr return %
Nandan Denim	4.04	582.36	6.58	49.96	601.54	11.65	22.72	11.46	2.93
Harshil Agrotech	4.27	303.68	5.48	11.23	61.12	27.05	29.82	16.41	777.27
PMC Fincorp	2.47	175.88	3.79	18.88	123.53	9.32	19.53	10.68	-5.93
Franklin Indust.	2.21	63.91	3.29	18.59	63	3.45	29.82	119.6	15.84
Shah Metacorp	3.45	201.78	3	30.21	158.58	22.15	24.23	4.94	-2.6
Godha Cabcon	0.82	76.77	2.79	5.16	94.35	14.88	27.14	1.38	9.33
Pro Fin Capital	4.5	143.1	1.58	1.81	32.64	79.06	19.53	3.75	182.69

Source: Screener and Money Control

Overview of Top Penny Stocks Under Rs.5:

Nandan Denim Limited:

Nandan Denim Ltd, incorporated in 1994, is part of the Ahmedabad-based Chiripal Group and specializes in manufacturing and distributing denim fabric, dyed yarn, cotton fabric, and shirting materials. The company is ISO 17050-1 and OEKO-TEX certified, supplying its products to domestic and international markets. With a vertically integrated production process and an in-house creative design studio, Nandan Denim focuses on innovation and expanding its global footprint.

The company has a fabric production capacity of 110 million meters per annum and exports to over 15 countries. It serves various international and domestic brands, leveraging its extensive dealer-distribution network. In FY2024, Nandan Denim reported revenue of ₹2,010 crore, with a profit after tax of ₹44.97 crore and a PAT margin of 2.24%. The company’s net profit significantly increased from ₹0.53 crore in FY2023. Its earnings per share (EPS) stood at ₹0.31 at the end of FY24. Source: Annual Report

Harshil Agrotech Limited:

Harshil Agrotech Ltd (HAL), incorporated in 1972, operates in the agriculture and commodities sector. The company prepares, manufactures, markets, trades, imports, and exports agricultural food products, including spices, oil seeds, grains, vegetables, herbs, and pickles. Previously known as Mirchi Technologies Ltd, HAL leverages agricultural and farming activities to operate its business.

The company has shown significant financial growth in recent quarters. In December 2024, net sales reached ₹25.73 crore, marking a 713.67% increase from ₹3.16 crore in December 2023. Quarterly net profit rose sharply to ₹5.48 crore, up 2599.66% from ₹0.20 crore in the previous year. EBITDA for the quarter stood at ₹5.38 crore, reflecting a 2239.13% growth. Additionally, HAL has maintained a healthy return on capital employed (ROCE) of 22.86% over the past three years and remains virtually debt-free.

Source: Money Control

PMC Fincorp Limited:

PMC Fincorp Ltd, incorporated in 1985, operates as a Non-Banking Financial Company (NBFC) registered with the Reserve Bank of India. Initially established to provide financial services, the company went public in 1988 and has since expanded its operations in corporate and personal finance, debt syndication, private placement, financial product distribution, and stock market investments. It does not accept public deposits and is classified as a Non-Systemically Important NBFC.

The company has been listed on the Bombay Stock Exchange since 2012. Over the years, it has built a presence in lending, mainly working with SMEs and corporate clients to provide structured financial solutions. For FY2024, PMC Fincorp Ltd reported a revenue of ₹15.66 crore and a net profit of ₹11.34 crore, with a net worth of ₹115.17 crore. The company continues to focus on financial services and investment activities, adapting to evolving market conditions while maintaining regulatory compliance.

Source: Annual Report

Franklin Industries Limited:

Franklin Industries Limited is engaged in contract farming and agricultural production, focusing on sustainable farming practices while maintaining operational profitability. The company collaborates with farmers through contractual agreements, ensuring crop cultivation aligns with market demand and business objectives.

The company operates a contract manufacturing model by leasing agricultural land and cultivating cucumber, onion, and castor crops. A portion of the yield is shared with contract farmers, contributing to the local farming community. In FY 2023-24, Franklin Industries Limited reported a revenue of ₹51 crore, a significant increase from ₹20.52 crore in the previous fiscal year. The net profit after tax rose to ₹10.46 crore from ₹2.14 lakh in FY 2022-23.

Source: Annual Report

Shah Metacorp Limited:

Shah Metacorp Limited, formerly known as Gyscoal Alloys Limited, is engaged in the manufacturing, exporting, and supplying of stainless steel and mild steel products. Incorporated in 1999 as Shreenath Mineral Metal Private Limited, the company initially operated in the trading of iron and steel scraps, billets, and long steel products. 

Over the years, it expanded its operations and rebranded to Gyscoal Alloys Limited before adopting its current name, Shah Metacorp Limited, in June 2023. The company operates a manufacturing facility in Kukarwadap with an annual production capacity of 18,000 MTPA, covering stainless steel grades from the 200 series to the 400 series. Its portfolio includes stainless steel bars and other long products catering to various industrial applications.

For FY2024, the company reported a total revenue of Rs.9,622.48 Lakhs, marking a 105.3% increase from Rs.4,687.92 Lakhs in FY2023. Profit After Tax (PAT) grew by 154.3% from Rs.165.37 Lakhs to Rs. 420.59 Lakhs. The company maintains a debt-free position without borrowings from banks or financial institutions. Source: Annual Report

Know More:  SEBI Registered investment advisory |  Stock investment advisory

Factors To Consider Before Investing In Penny Stocks:

Penny stocks are often sought after especially for investing in multi-bagger penny stocks. But to select the right company, you must consider the following factors before investing-

Assess the Company’s Financial Health

Review financial statements to determine profitability, debt levels, and overall stability. A strong balance sheet and consistent revenue growth indicate a company with potential, while losses or excessive debt may signal financial distress.

Analyze Trading Volume

Low trading volume can make buying or selling shares at desired prices difficult, leading to liquidity issues. A higher-volume stock generally indicates more substantial market interest, reducing the risk of being unable to exit a position when needed.

Monitor Stock Price Movements

Penny stocks are highly volatile. Using charting tools to analyze price trends, support levels, and resistance points helps identify favorable entry and exit points, reducing the risk of overpaying for shares.

Check Company News and Developments

Research recent press releases, product launches, or strategic partnerships. Positive developments can drive stock prices, while negative news may lead to a sharp decline. Examining management’s past decisions and plans provides further insight into the company’s growth potential.

Avoid Companies With Low Transparency

Many penny stocks lack analyst coverage or extensive regulatory oversight. Verify if the company provides detailed reports, shareholder communications, and transparent financial disclosures. Limited information can indicate higher risk and potential red flags.

Diversify and Invest Cautiously

Investing in multiple penny stocks across different sectors can spread risk. Avoid allocating significant capital to a single stock, and ensure investments align with personal risk tolerance.

Bottomline:

Investment in penny stocks can be lucrative but comes with significant risks. Conduct thorough research, assess financial stability, and monitor trading volumes before deciding. Look for transparent companies with growth potential and avoid low-liquidity stocks. Using stock market advisory services can provide valuable insights to navigate this high-risk segment effectively. Diversify investments and approach penny stocks cautiously to balance potential gains with market uncertainties.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

FAQs

After you have understood and answered the primary questions, ‘What is income tax?’ and ‘How do I file an IRTR?’, the next in line is about how one can reduce their tax liability. For this, the government has included multiple provisions for exemptions and deductions that a taxpayer can claim to reduce the payable tax amount. One such provision is the deduction allowed under Section 80D. 

What is it? And why do even investment advisory firms insist on understanding it? Read on to learn the details of the deduction under 80D. 

What is Section 80D?  

Section 80D of the Income Tax Act, 1961, lets you claim deductions on health insurance premiums. You can avail of this benefit for premiums paid for yourself, your spouse, dependent children, and parents. Medical expense deductions for uninsured senior citizen parents are also eligible under this section. 

Understanding the Purpose of Section 80D in Income Tax

Section 80D was introduced to encourage individuals to secure health insurance for themselves and their families. This provision serves two purposes: promoting financial security through health insurance and helping taxpayers save on taxes. Section 80D covers more than just premiums; it includes preventive health check-up expenses within the specified limits. 

However, the deductions under 80D are only available under the old tax regime. So, if you want to claim this benefit, opt for the old tax regime while filing your returns. 

Who Can Claim Deductions Under Section 80D?

Section 80D deductions can be claimed by:

1. Individual taxpayers pay the health insurance premium 
2. for themselves, their spouses, dependent children, and parents. 
3. A HUF that has paid premiums for any member of the HUF is eligible to claim a deduction.

80D Deduction Limits:  

Deduction Limits for Individuals Below 60 Years:

Individuals under 60 can claim up to Rs.25,000 in a year for health insurance premiums paid for themselves, their spouses, and dependent children. Parents under 60 can claim an additional Rs.25,000, making the total limit Rs.50,000.

Additional Limits for Senior Citizens:  

The deduction limit for senior citizens (60 years or older) is Rs.50,000 per year. If the taxpayer and their parents are senior citizens, the combined deduction limit increases to Rs.1,00,000 annually. For NRIs, the maximum limit remains Rs.25,000, regardless of age.

Combined Limits for Family and Parents:

When both family and parents are covered, the total deduction limit varies:

• Family and parents below 60: Rs.50,000.
• Family below 60 and parents above 60: Rs.75,000.
• Both family and parents above 60: Rs.1,00,000.

Know More:  SEBI Registered investment advisory |  Stock investment advisory

What Expenses Are Covered Under Section 80D?  

Section 80D of the Income Tax Act provides tax relief for various healthcare expenses, including health insurance premiums, preventive health check-ups, and even medical expenses for senior citizens without insurance. Here’s a detailed breakdown:

1. Health Insurance Premiums for Self, Spouse, and Children:

You can claim deductions for your health insurance premiums and those of your spouse and dependent children. The maximum deduction in this case is Rs.25,000 per year. If you or your spouse is a senior citizen (60 years or above), this limit increases to Rs.50,000.

For instance, Rahul, 45, pays Rs.20,000 for a family floater plan that covers him, his wife, and two children. He can claim the full Rs.20,000, which falls within the Rs.25,000 limit.

2. Premiums for Dependent Parents (Senior and Non-Senior Citizens):

Taxpayers can also claim deductions on their parent’s health insurance premiums. If the parents are below 60 years, the deduction is capped at Rs.25,000. For senior citizen parents, the limit increases to Rs.50,000. This is over and above the family limit.

For example, say you pay ₹25,000 for your family’s health insurance and ₹30,000 for your senior citizen parents. You can claim ₹25,000 for your family and ₹30,000 for your parents, bringing your total deduction to ₹55,000 under Section 80D.

3. Preventive Health Checkups and Their Deduction Limit:

Preventive health check-ups up to Rs.5,000 per year are eligible for deductions within the overall limits of Rs.25,000 or Rs.50,000, depending on the insured’s age. Additionally, if a senior citizen has no health insurance, medical expenses incurred on their treatment can be claimed as a deduction, up to Rs.50,000 annually. 

For instance, if you pay Rs.30,000 for your family’s health insurance and Rs.30,000 for medical expenses for your 65-year-old parents, who have no insurance, you can claim Rs.25,000 for your family and Rs.30,000 for your parents, totaling Rs.55,000 under Section 80D.

However, if you spend Rs.3,000 on your health check-up and Rs.2,000 on your parents’ check-up, you can claim the full Rs.5,000 within the overall Section 80D deduction limit.

Apart from these three, if you pay for a multi-year health insurance policy, the total premium is divided proportionately over the policy tenure, and deductions can be claimed yearly. Section 80D ensures financial relief even for senior citizens without insurance by allowing deductions for medical expenses incurred. These benefits make it easier to secure your family’s health and save on taxes simultaneously.

80D Deduction List  

Overview of Deductible Expenses Under Section 80D  

Policy For?	Deduction for Self & Family	Deduction for Parents	Preventive Health Check-up	Maximum Deduction
Self & Family (below 60 years)	Rs.25,000	–	Rs.5,000	Rs.25,000
Self & Family + Parents (all below 60)	Rs.25,000	Rs.25,000	Rs.5,000	Rs.50,000
Self & Family (below 60) + Parents (above 60)	Rs.25,000	Rs.50,000	Rs.5,000	Rs.75,000
Self & Family + Parents (all above 60)	Rs.50,000	Rs.50,000	Rs.5,000	Rs.1,00,000
Members of HUF (below 60 years)	Rs.25,000	Rs.25,000	Rs.5,000	Rs.25,000
Members of HUF (a member above 60 years)	Rs.50,000	Rs.50,000	Rs.5,000	Rs.50,000

Key Exclusions Not Covered by Section 80D  

1. Premiums Paid in Cash: Health insurance premiums paid in cash are not eligible for deductions. Only payments made through digital modes, cheques, or demand drafts qualify.
2. Default in Premium Payments: If the health insurance premium is not paid during the financial year, you cannot claim any deduction under Section 80D for that year.
3. Employer-Paid Group Health Insurance: If your employer pays the premium for a group health insurance plan covering you and your family, you cannot claim deductions for that amount. The tax benefit applies only to premiums you pay.
4. Premiums for Employed Children or Other Relatives: Premiums paid for working children, siblings, uncles, aunts, or grandparents are not eligible for deductions. The benefit is restricted to premiums paid for yourself, your spouse, dependent children, and parents.

Benefits of Claiming Deduction Under Section 80D  

1. Significant Tax Savings for Individuals and Families 

Section 80D offers substantial tax savings by allowing deductions on health insurance premiums and medical expenses. The savings depend on your income tax slab. For example:

• If you fall under the 5% tax slab, you can save up to Rs.1,300 on a Rs.25,000 deduction and Rs.5,200 on a Rs.1,00,000 deduction.
• In the 20% tax slab, the savings range from Rs.5,200 to Rs.20,800.
• With a Rs. 1,00,000 deduction, the savings can reach Rs. 31,200 for the highest tax slab (30%).

This makes health insurance a cost-effective way to protect your health and finances.

2. Incentive to Maintain Health Insurance Coverage  

Section 80D promotes financial preparedness for medical emergencies by encouraging taxpayers to maintain health insurance coverage. Benefits include tax deductions for health insurance premiums, preventive health check-ups (up to Rs.5,000), and premiums for pre-existing or critical illness covers. Policies also cover ambulance charges, domiciliary expenses, and pre-and-post-hospitalization costs, ensuring comprehensive healthcare protection.

3. Comprehensive Financial Protection Against Medical Expenses

Health insurance under Section 80D reduces financial stress during medical emergencies. It covers cashless hospitalizations, ambulance charges, and pre/post-treatment expenses. Plus, the coverage for pre-existing and critical illnesses ensures you can access quality healthcare without affecting your financial stability.

How to Claim 80D Deduction in Income Tax Returns  

Step-by-Step Guide to Filing for Section 80D Deduction

1. Gather all documents, including proof of payment for health insurance premiums and receipts for medical expenses.
2. Compute deductions allowed under Section 80D
3. Fill out Schedule 80D by following the steps for how to file ITR online:-

• Log in to the ITR e-filing portal and select the appropriate ITR form (ITR-1 or ITR-4).
• Go to “Gross Total Income” and click “Tax Deductions.”
• Select “Yes” for eligibility to claim health insurance premium deductions.
• Fill in details of health insurance premiums and preventive health check-ups in Schedule 80D.
• Verify the information and submit it. The tax department will adjust your taxable income accordingly.

Documents Required for Claiming Deduction

Apart from the regular tax filing documents like PAN card, Form 16, Form 26AS, Aadhaar card, and bank statements, you will need specific documents to claim the Section 80D deduction for health insurance premiums. These include premium payment receipts for health insurance policies and copies of the health insurance policy documents. 

Common Mistakes to Avoid When Claiming 80D Deduction  

1. Miscalculating the Deduction Limit  

Many forget to include the entire premium amount, including handling and administrative charges. To get the full benefit, ensure that you account for all components of the insurance premium when claiming your deduction.

2. Submitting Incomplete or Incorrect Documents  

Proof of payment is crucial when claiming the 80D deduction. Failure to submit receipts, canceled cheques, or other relevant documents can lead to the rejection of your claim. Always double-check that all required documents are included.

3. Failing to Include Preventive Health Checkups

Don’t overlook claiming deductions for preventive health checkups. Deductions of up to Rs.5,000 apply, and many miss this when filing. Be sure to include any preventive checkup expenses you’ve incurred during the financial year.

Section 80D and Other Income Tax Benefits  

Comparison With Other Health-Related Deductions 

Point of Difference	Section 80D	Section 80DD	Section 80DDB	Section 80U	Section 80C	Section 10(10D)
Purpose	Tax deduction for health insurance premiums and preventive health check-ups.	Tax deduction for medical treatment of a dependent with a disability.	Tax deduction for specified diseases or ailments for self or dependents.	Tax deduction for medical treatment of an individual with a disability.	Deductions for tax-saving investments like PPF, ELSS, life insurance premiums, etc.	Tax exemption for insurance payouts received by nominees in case of the policyholder’s death.
Maximum Deduction Limit	Rs.1,00,000 (for self, family, and senior citizen parents).	Rs.75,000 for disability; Rs.1,25,000 for severe disability.	Rs.40,000 (below 60); Rs.1,00,000 (60 or above) or the amount spent, whichever is lower.	Rs.75,000 for disability; Rs.1,25,000 for severe disability.	Rs.1,50,000 per financial year.	No maximum limit for the exempted amount.
Type of Assessee	Individual or HUF.	Resident Individual or HUF.	Resident Individual or HUF.	Resident Individual.	Individual or HUF.	Individual or nominee receiving insurance payout.
Scope of Tax Benefits	Covers premiums for self, spouse, children, parents, and preventive check-ups.	Covers medical treatment, training, or rehabilitation of a dependent with a disability.	Covers expenses for treating specific diseases like cancer, renal failure, etc.	Provides relief to individuals with certified disabilities.	Covers long-term savings and investment plans.	Focused solely on life insurance payouts and surrender values.

How Section 80D Complements Section 80C for Tax Savings

Section 80D provides additional tax-saving opportunities beyond Section 80C. While Section 80C focuses on investments like PPF, EPF, and life insurance premiums, Section 80D addresses health insurance premiums and medical expenses. Together, these sections allow taxpayers to reduce taxable income more effectively:

• Section 80C covers deductions up to Rs.1,50,000, primarily for long-term savings and investments.
• Section 80D allows up to Rs.1,00,000 for medical and health-related expenses, adding a layer of financial security.

So suppose you invest Rs.1,50,000 in PPF and ELSS under Section 80C and pay Rs.25,000 for health insurance premiums for yourself and Rs.50,000 for your senior citizen parents under Section 80D. You can claim a total deduction of Rs.2,25,000 (Rs.1,50,000 under 80C + Rs.75,000 under 80D) and reduce your taxable income.

Conclusion:

Maximize your tax savings with Section 80D health deductions by understanding its intricacies and how it fits into broader income tax concepts. Section 80D is a crucial part of the Income Tax Act that allows you to claim significant deductions on health insurance premiums while securing your financial and physical well-being. This provision is the perfect way to balance future security with immediate tax benefits.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

FAQ

Investing in the stock market can be an exciting way to build wealth, especially by identifying good stocks with strong growth potential over time. The stocks under 50 may offer investors an opportunity to dive into potential growth without breaking the bank. 

However, like all investments, there are risks, and understanding these stocks and their characteristics is important for making informed decisions. Let’s dive into stocks under 50 and explore a list of some popular choices.

What Are Penny Stocks?

Before we start, let’s understand – what are penny stocks. In simple terms, penny stocks are shares that trade at a low price, typically under Rs. 50, though some definitions consider stocks under Rs. 100 or Rs. 200 as penny stocks. The appeal of these stocks often lies in their low price, which can appeal to new investors looking to buy many shares without committing a lot of money upfront.

However, penny stocks tend to be more volatile and come with higher risk. small cap stocks, a common category of penny stocks, are often new companies with potential for growth but also face challenges in establishing their market position. This makes them an exciting yet risky venture.

Why Invest in Stocks Under 50?

There are several reasons why investors consider stocks under 50 for their portfolio:

1. Affordability: With a lower price point, you can buy a larger number of shares for a smaller investment, which might give you the chance to see significant returns if the stock performs well.
2. Potential for Growth: Some of these stocks are from small companies or those in the early stages of growth. If their businesses expand or they find success, the stock price could increase, making them multibagger penny stocks—stocks that give investors returns multiple times their original investment.
3. Diversification: Investing in good stocks under 50 allows you to diversify your portfolio with a range of companies, increasing the chances of finding one that will rise significantly in value.

Let’s explore the list of stocks under 50 that performed well in terms of revenue and profits in the recent quarter ending December 2024. 

1. Indian Overseas Bank
2. IRB Infrastructure Developers Ltd.
3. Sagility India Ltd.
4. Motherson Sumi Wiring India Ltd.
5. Century Extrusions Ltd.
6. Ujjivan Small Finance Bank Ltd.
7. UCO Bank
8. Central Bank of India
9. Punjab & Sind Bank
10. Bank of Maharashtra

Indian Overseas bank

Indian Overseas Bank (IOB), headquartered in Chennai, is a prominent Indian public sector bank.  Founded in 1937, it aimed to specialize in foreign exchange and overseas banking.  Nationalized in 1969, IOB offers diverse financial services, including retail and corporate banking, and boasts a widespread network of branches across India and some international locations.  It is known for its long history and contribution to the Indian banking sector.  

Market Cap in Crore (as of 18-2-250	PE Ratio	CMP	High	ROCE %	ROE%	3 Yr Return %
₹ 85,496	27.7	₹ 45.2	₹ 75.6	5.41	9.98	34

Source: Screener

Indian Overseas Bank reported a revenue of Rs. 7,112 crore for the quarter ending December 2024, marking a 15% increase compared to the revenue of Rs. 6,176 crore recorded for the same quarter last year. The bank’s profit for the quarter also rose to Rs. 874 crore, up from Rs. 723 crore recorded in the quarter ending December 2023, reflecting a 21% growth in profits.

Source: Screener

Know More:  SEBI Registered investment advisory |  Stock investment advisory

IRB Infrastructure Developers Ltd

IRB Infrastructure Developers Ltd. is a leading Indian highway construction company headquartered in Mumbai. Established in 1998, it specializes in build-operate-transfer (BOT) road projects. The company is known for its involvement in major infrastructure projects, including expressways and national highways. IRB also operates through its Infrastructure Investment Trusts. They have a large portfolio of operational and under-development road projects throughout india.

Market Cap in Crore (as of 18-2-250	PE Ratio	CMP	High	ROCE %	ROE%	3 Yr Return %
₹ 27,785	37.2	₹ 46	₹ 78.2	8.96	4.38	23

Source: Screener

IRB Infrastructure Developers Ltd. reported a revenue of Rs. 2,025 crore for the quarter ending December 2024, showing a modest 3% increase from the Rs. 1,969 crore recorded in the same quarter last year. However, the company’s profit for the quarter surged to Rs. 6,026 crore due to an exceptional income of Rs. 5,804 crores. In the same period previous year, the company’s net profit was Rs. 187 crore .

Source: Screener

Sagility India Ltd

Sagility India Ltd. provides business process management (BPM) solutions, primarily for the healthcare industry. It focuses on improving operational efficiency and customer experience for healthcare providers and payers. Offering services like claims processing, patient engagement, and revenue cycle management, Sagility leverages technology and analytics to streamline healthcare operations. The company plays a crucial role in supporting the healthcare sector’s administrative functions.

Market Cap in Crore (as of 18-2-250	PE Ratio	CMP	High	ROCE %	ROE%	3 Yr Return %
₹ 21,857	96	₹ 46.7	₹ 56.4	4.71	3.6	–

Source: Screener

Sagility India Ltd reported a revenue of Rs. 1,453 crore for the quarter ending December 2024, representing a 15.3% increase compared to the Rs. 1,260 crore recorded in the same quarter last year. The company’s profit for the quarter also rose to Rs. 217 crore, up from Rs. 71 crore in the quarter ending December 2023, reflecting a remarkable 205% growth in profits.

Motherson Sumi Wiring India Ltd

Market Cap in Crore (as of 18-2-250	PE Ratio	CMP	High	ROCE %	ROE%	3 Yr Return %
₹ 21,354	33.8	₹ 48.3	₹ 80.0	48.0	42.4	–

Motherson Sumi Wiring India Ltd reported a revenue of Rs. 2,300 crore for the quarter ending December 2024, marking a 9% increase from Rs. 2,115 crore recorded in the same quarter last year. However, the company’s profit for the quarter stood at Rs. 140 crore, down from Rs. 168 crore in the quarter ending December 2023, reflecting a 16% decline in profits.

Source: Screener

Century Extrusions Ltd.

Century Extrusions Ltd. is an Indian company specializing in aluminum extrusions. Established in 1991, it manufactures a wide range of aluminum products for various industries, including construction, transportation, and electrical. Based in Kolkata, the company focuses on quality and innovation, providing customized solutions to meet diverse client needs. Century Extrusions plays a significant role in India’s aluminum manufacturing sector.

Market Cap in Crore (as of 18-2-250	PE Ratio	CMP	High	ROCE %	ROE%	3 Yr Return %
₹ 153	18.4	₹ 19.1	₹ 30.7	17.1	10.5	20

Source: Screener

Century Extrusions Ltd reported a revenue of Rs. 103.54 crore for the quarter ending December 2024, an 8.5% rise from Rs. 95.44 crore recorded in the same quarter last year. The company’s profit for the quarter reached Rs. 2.45 crore, up from Rs. 1.94 crore in the quarter ending December 2023, reflecting a 26% growth in profits.

Source: Screener

Key Considerations Before Investing in Stocks Under 50

Before you jump into the world of low-cost stocks, it’s important to approach them with caution. A share market advisor can help you navigate these waters. They can guide you toward choosing stocks with solid fundamentals, reducing the risk of making a poor investment decision.

• Research: Always research the company thoroughly. Understand its business model, market potential, and growth trajectory. Just because a stock is priced low doesn’t mean it’s a good deal.
• Risk Management: Penny stocks can be highly volatile, meaning they may experience sharp price fluctuations. Always invest an amount you can afford to lose and keep an eye on the stock’s performance.
• Diversification: Don’t put all your money into one stock. Spread out your investment across different stocks and sectors to minimize risk.

How to Approach Investing in Small Cap Stocks

Investing in small cap stocks or penny stocks requires patience and a clear strategy. Many investors are drawn to the idea of buying large quantities of shares at a low price, but you should remember that these stocks may take time to show a return. The key to success with small-cap stocks is to identify companies with strong growth potential, good management, and a competitive edge in their market.

Having a share market advisor on your side can be an invaluable resource when analyzing small-cap stocks. They can help you spot the best potential opportunities, mitigate risks, and guide your investment decisions.

Final Thoughts

Stocks under 50 can be a great way to enter the stock market without a large financial commitment. With the potential for growth, especially in the multibagger penny stocks category, these investments can offer a chance for good returns. 

However, they come with inherent risks due to volatility and the challenges many of these companies face. Always ensure you research well, consider expert advice, and approach these investments with caution. 

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

FAQ

Investing in the stock market can be tricky, especially for beginners. However, understanding technical indicators like the Morning Star pattern can help make better investment decisions. Traders widely use this simple yet powerful pattern to predict potential trend reversals. 

Investors looking for high return stocks often rely on such patterns to identify potential entry points. The Morning Star pattern signals a bullish reversal, making it a valuable tool in stock market advisory strategies. By combining this indicator with other technical and fundamental analyses, traders can enhance their decision-making process and improve their chances of making profitable investments. 

This article will explain the Morning Star candlestick pattern, how it forms, and how to

 use it to invest smartly.

What is the Morning Star Pattern?

The Morning Star is a bullish reversal candlestick pattern that appears after a downtrend. It signals that the market is shifting from a bearish (downward) trend to a bullish (upward) trend. The pattern consists of three candlesticks and suggests that selling pressure is weakening, allowing buyers to take control.

Think of it as the light after a long dark night – the market, which was falling, is now showing signs of recovery.

Formation of the Morning Star Pattern

The Morning Star pattern consists of three candles:

1. First Candle (Bearish Candle)
   • This long red (or black) candle indicates intense selling pressure.
   • The price closes lower than it opened, continuing the downtrend.
2. Second Candle (Small or Doji Candle)
   • This smaller candle can be red, green, or even a doji (a candle with very little body).
   • It represents market indecision – neither buyers nor sellers are in full control.
3. Third Candle (Bullish Candle)
   • This is a long green (or white) candle that closes above the midpoint of the first candle.
   • It confirms that buyers have taken over, indicating a possible trend reversal.

For this pattern to be reliable, the third candle should close strongly bullish, showing a clear trend reversal. It should recover most of the losses from the first bearish candle, indicating strong buying pressure. A higher closing price confirms the shift from a downtrend to an uptrend.

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What Does the Morning Star Pattern Indicate?

The Morning Star candlestick pattern signals a possible market reversal. It typically appears after a downtrend, suggesting that selling pressure is weakening and buyers are gaining control.

In a bearish trend, the first candle continues the downward movement, followed by a second candle that shows hesitation in the market. The third candle confirms the reversal with a strong, bullish move. This pattern helps traders anticipate a potential upward trend.

How to Identify the Morning Star Pattern?

To spot a Morning Star pattern on a stock chart, look for the following characteristics:

• It must appear after a downtrend.
• The first candle should be long and bearish.
• The second candle should be small, showing market hesitation.
• The third candle must be strong and bullish, closing above the midpoint of the first candle.
• Trading volume should ideally increase on the third day, confirming the bullish reversal.

How to Invest Using the Morning Star Pattern?

Once you identify a Morning Star pattern, here’s how you can use it to make an informed investment decision:

Confirm the Pattern

Do not invest immediately after spotting the pattern. Instead, wait for confirmation. Check whether the third candle closes above the midpoint of the first candle and whether the next candle also opens strongly.

Source: learnstockmarket.in

Check Trading Volume

A Morning Star pattern is more reliable if the trading volume increases on the third candle. High volume indicates that more traders believe in the reversal.

Use Additional Indicators

To reduce risks, use technical indicators like:

• Moving Averages: A crossover of short-term moving averages above long-term moving averages can confirm the trend reversal.
• RSI (Relative Strength Index): An RSI moving above 30 from oversold territory supports the pattern’s validity.
• Support and Resistance Levels: If the Morning Star appears near a strong support level, it adds to its reliability.

Set a Stop-Loss

Always set a stop-loss to manage risk. A good strategy is to place the stop-loss below the low of the second candle. This way, if the pattern fails, you limit your losses.

Plan Your Exit Strategy

While entering a trade is important, knowing when to exit is equally crucial. You can set a target based on previous resistance levels or trailing stop-loss to lock in profits as the price rises.

Example of a Morning Star Pattern in Action

Let’s say a stock is in a downtrend, and the following happens:

• Day 1: A long red candle forms as the stock closes lower.
• Day 2: A small-bodied candle appears, indicating indecision.
• Day 3: A long green candle forms, closing above the midpoint of the first day’s candle.
• Volume increases on the third day, confirming buying pressure.

At this point, a trader can consider entering a long position (buying the stock) after further confirmation.

Advantages of Using the Morning Star Pattern

• Easy to Identify: Spotting this pattern on a chart becomes simple once you understand the structure.
• Effective in Predicting Reversals: It signals trend changes early, allowing traders to enter early.
• Works in Different Markets: This pattern can be used in stocks, forex, commodities, and cryptocurrencies.

Limitations of the Morning Star Pattern

• Not Always Accurate: Like all technical patterns, the Morning Star is not foolproof and should be used along with other indicators.
• Needs Confirmation: Acting on the pattern alone without confirming signals can lead to losses.
• Market Conditions Matter: The pattern may not work well in choppy or sideways markets.

Final Thoughts

The Morning Star pattern is useful for traders looking to spot potential bullish reversals. Investors can make better-informed trading decisions by understanding its formation, confirming signals, and using additional technical indicators. 

Additionally, consider using the cup and handle pattern and the rounding bottom pattern alongside the Morning Star to confirm bullish signals. These patterns help identify strong continuation trends, improving the accuracy of your trades. 

However, always remember that no pattern guarantees success. Combine technical analysis with fundamental research, manage risks with stop-losses, and avoid emotional trading. 

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

FAQs

Equity investments include investments in different types of stocks classified based on class, ownership, market capitalization, price volatility, economic trends, and profit sharing. One of the types is the penny stock, which trades on the stock market at a very low price, usually below Rs.20 or Rs.50. In this article, we shall discuss the top ten penny stocks priced under Rs.10 on the stock exchange. 

What Are Penny Stocks?

Penny stocks are low-priced shares of small public companies, often traded below Rs.20 or Rs.50. These stocks attract investors looking for affordable opportunities with the potential for high returns. However, they come with risks, including limited liquidity, price volatility, and lower regulatory oversight.

Since penny stocks trade infrequently, their prices can fluctuate sharply based on market demand. This unpredictability makes them appealing to traders who seek quick gains or look for multi-bagger penny stocks, but it also means that investors should be cautious. While some stocks in this category belong to emerging businesses with growth potential, others may lack financial stability, increasing the risk of losses.

Despite the risks, penny stocks allow new investors to experiment with the stock market at a lower entry cost. Their speculative nature means trading doesn’t always require complex technical analysis, but a strategic approach can help navigate price movements. For businesses, these stocks offer a way to raise capital before moving to larger exchanges.

Top Penny Stock Under 10:

Based on the net profits for the quarter ending December 2024, the list of top penny stocks under Rs.10 as of 18th February 2025 is as follows-

Name	Share Price	Mar Cap Rs.Cr.	NP Qtr Rs.Cr.	NP 12M Rs.Cr.	Net worth Rs.Cr.	P/E	Ind PE	ROCE %	3 yr return %
Spright Agro	6.48	694.34	7.09	26.08	123.98	26.62	29.82	38.62	671.43
Sarveshwar Foods	7.05	690.08	7.08	22.45	288.37	30.75	30.27	11.77	232.54
Davangere Sugar	5.15	484.54	6.77	13.55	342.19	35.76	11.75	6.86	NA
Ashapuri Gold	7.88	262.64	4.19	13.41	142.43	19.58	34.95	10.3	35.11
Kritika Wires	8.74	232.73	2.12	11.79	88.9	19.74	24.23	15.68	NA
Shish Industries	8.75	332.06	1.73	10.77	99.63	30.82	27.54	21.41	156.64
Shangar Decor	5.01	49.06	1.47	2.97	8.25	16.52	27.05	6.94	3.15

Source: Screener and MoneyControl

Overview Of The Top Penny Stocks Under Rs.10:

Spright Agro Limited:

Spright Agro Limited, established in 1994, has been engaged in the development of agricultural and forest resource-based industries for over three decades. The company operates across various segments, including contract farming, greenhouse technology, modern agro-farming, aeroponics, hydroponics, organic farming, cold storage, B2B agriculture, B2C retail, and exports. 

The company cultivates and processes a range of agricultural and horticultural crops, including medicinal and aromatic plants, through owned and leased farms. Additionally, it functions as a manufacturer, importer, exporter, wholesaler, and retailer of agricultural commodities.

In FY2024, Spright Agro Limited reported a total revenue of Rs. 72.47 crore and a net profit of Rs. 11.62 crore. For Q3 FY2025, the company achieved net sales of Rs. 54.91 crore, marking a 142.13% increase from Rs. 22.68 crore in Q3 FY2024. Plus, quarterly net profit stood at Rs. 7.09 crore, reflecting a 28.88% year-on-year growth. 

Source: Money Control

Sarveshwar Foods Limited:

Incorporated in 2004, Sarveshwar Foods Ltd (SFL) is engaged in the processing and marketing of branded and unbranded basmati and non-basmati rice for domestic and international markets. A part of the Sarveshwar Group, the company operates out of Jammu and Kashmir, with a distribution network spanning 500+ distributors and 800+ retail outlets across India. Internationally, it has a presence in 45+ countries.

The company owns two USFDA- and BRC-approved processing facilities in Jammu and Kashmir. Sarveshwar Foods is also the first company in Jammu & Kashmir to receive a Geographical Indication (GI) tag for Basmati Rice from APEDA under the Ministry of Commerce & Industry. Additionally, the company markets organic food products under its brand “Nimbark”.

In April 2024, Sarveshwar Foods acquired a 100% stake in Green Point Pte. Ltd., a Singapore-based company, making it a wholly owned subsidiary. The company reported Rs.869.59 crore in revenue for FY24, marking a 26% growth from the previous year. Plus, EBITDA increased by 56% to Rs.63.06 crore, and profit after tax (PAT) doubled to Rs.16.78 crore. For the December 2024 quarter, the company’s revenue stood at Rs.282.14 crore, with a profit of Rs.7.07 crore.

Source: Annual Report

Davangere Sugar Company Limited:

Davangere Sugar Company Limited (DSCL) was incorporated in 1970 as a joint sector company with investments from Karnataka Agro Industries Corporation, financial institutions, and local farmers. It began commercial sugar production in 1974, and the Karnataka government managed its operations until 1995 when the Shamanur Group acquired its shares and took over management.

DSCL has since expanded beyond sugar into ethanol and sustainable power. It operates a 65 KLPD ethanol unit and a 24.45 MW co-generation power plant while sourcing sugarcane from 4,800 hectares, supported by a network of 4,990 farmers as of 31st March 2024. Plus, in FY2024, the company reported Rs.216.53 crore in revenue, Rs.12.23 crore in profit, a 5.65% net profit margin, and a debt-equity ratio of 0.8. 

Source: Annual Report

Ashapuri Gold Ornament Limited:

Ashapuri Gold Ornament Ltd. (AGOL), incorporated in 2008, is engaged in the manufacturing and trading of gold ornaments and jewelry of various designs. Initially focused on wholesale jewelry trading until March 2019, the company transitioned into manufacturing, outsourcing production through job work in Ahmedabad and Rajkot.

With over 25 years in the industry, AGOL serves 30+ corporate clients, including Tanishq, Malabar Gold & Diamonds, and Joyalukkas. Plus, its portfolio houses high-end brands like Kaavis and Maayin.

For FY2024, AGOL reported a revenue of Rs.165.06 crore and a net profit of Rs.7.42 crore. In Q3 FY2024, net sales rose by 103.03% YoY to Rs.101.45 crore, while net profit increased by 101.94% YoY to Rs.4.19 crore. EBITDA for the quarter stood at Rs.5.59 crore, reflecting a 74.69% YoY growth. 

Source: Company Report

Know More:  SEBI Registered investment advisory |  Stock investment advisory

Kritika Wires Limited:

Kritika Wires Ltd, incorporated in 2004, is engaged in the manufacturing, export, and supply of industrial steel wires and galvanized wires. The company operates a manufacturing facility at Sankrail Industrial Park, Howrah, with a total installed capacity of 66,200 MTPA. It caters to both government and private sector clients, including Bajaj Electricals, Godrej & Boyce, Kalpataru Power Transmission, Tata Projects, Voltas, and Power Grid Corporation of India Limited. 

The company specializes in the production and sale of winding wires, serving both industrial and retail segments. In FY2024, the company reported revenue from operations of Rs.431.73 crore, compared to Rs.282.30 crore in FY2023. Net profit stood at Rs.10.40 crore, with a net profit ratio of 2.35%. For the December 2024 quarter, net sales increased by 93.76% year-on-year to Rs.178.93 crore, while net profit grew by 12.86% to Rs.2.12 crore. EBITDA rose by 31.75% to Rs.5.56 crore. 

Source: Annual Report

Bottomline:

Investing in shares below 10 rupees can be an attractive opportunity for investors looking to enter the stock market with a lower capital outlay. However, these small-cap stocks have inherent risks, given their high volatility, low liquidity, and limited financial disclosures. Prices can fluctuate sharply due to speculative trading, and some companies may lack the financial stability to sustain long-term growth. 

Therefore, a well-researched approach, backed by insights from a stock market advisory company, can help you make informed decisions. While penny stocks offer the potential for high returns, carefully evaluating a company’s fundamentals, management quality, and market trends is crucial before investing.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

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