Article

5 Penny Stocks which are not Penny

07 Aug 2019 Nikita Bhoota

Penny stocks are the ones which trade at a very low price. Usually, these stocks lack liquidity and carry high risk. The public information available on these stocks/companies is very limited, which makes it difficult for an investor to understand the future prospects of the business. However, penny stocks with good fundamentals and strong business models have the potential to become multi baggers in the long run. Here are some of these stocks.

Sintex Plastics (SPTL)

SPTL was established by transferring the plastic business (66% of FY17 revenue) and the Prefab & Infra business of Sintex Industries (34% of FY17 revenue). Sintex Plastics, a leading player in custom molding business (mainly composites), stands to benefit from growing trend of composites replacing metal parts across industries. Thus, we expect revenue CAGR of 12.8% over FY18E-20E. We see EBITDA CAGR of 15.6% over FY18E20E due to operating leverage and better product mix over FY18E-20E. Owing to the decline in interest outgo, we expect SPTL to post 17.5% PAT CAGR over FY18E-20E. SPTL is done with its capex cycle and has lowered its focus on w/c intensive Prefab & Infra business, thus enhancing cash generation. This will lead to net debt declining by ~Rs1,500cr over FY17-20E.

Year Net Sales (Rs Cr) OPM (%) Net Profit (Rs Cr) EPS (Rs) PE (x)
FY18E 5,996 15.0% 332 5.6 11.6
FY19E 6,757 15.3% 392 6.6 9.9
FY20E 7,635 15.7% 458 7.8 8.4

Source: 5paisa research

NHPC

NHPC is a hydropower generation company with power generation capacity of 5,171MW in FY17. The company generated 23,275mn units of electricity against a target of 23,000 for FY17. The company is planning a significant expansion of power generation capacity over the coming years. A total of 8,481MW is currently under the clearance/approval stage. This includes plans to setup a thermal plant (1,320MW capacity) through a joint venture. We expect the company to report revenue CAGR of 18.1% over FY18E-20E aided by 7.2% CAGR in generation volumes and Plant Load Factor (PLF) remaining at 62-63% over the same period. We see EBITDA CAGR of 28.2% over FY18E20E aided by better utilization of newly added capacity. We expect PAT CAGR of 20.8% over FY18E-20E.

Year Net Sales (Rs Cr) OPM (%) Net Profit (Rs Cr) EPS (Rs) PE (x)
FY18E 9,031 57.3% 2855 2.8 9.9
FY19E 10,700 63.3% 3,593 3.5 7.9
FY20E 12,600 67.4% 4167 4.1 6.8

Source: 5paisa research

MEP Infra

MEP Infrastructure is independently and collectively engaged in toll projects, OMT (Operate, Manage & Transfer), Hybrid Annuity Model (HAM) and BOT. Due to MEP's JV with San Jose India, it is strategically planning to extend its road development portfolio based on HAM. It has bagged 5 new projects under HAM model worth Rs3,230cr.  MEP has achieved the first milestone for the Nagpur, Package-II and Mahuva to Kagavadar project. The Authority paid the first milestone payment (20% of physical progress) for Nagpur, Package-II and Mahuva to Kagavadar. The appointment date for other two HAM projects is expected shortly. The company has started collecting toll from 124 entry points to Delhi. EPC order book of Rs3,000cr also provides strong revenue visibility. Thus, we expect 27% CAGR in revenue over FY18E-20E. We see PAT CAGR of 39% over FY18E-FY20E.

Year Net Sales (Rs Cr) OPM (%) Net Profit (Rs Cr) EPS (Rs) PE (x)
FY18E 2,444 44.2% 67 4.1 20.9
FY19E 3,877 33.3% 116 7.2 12.0
FY20E 3,994 33.6% 124 7.6 11.3

Source: 5paisa research

IDFC Ltd

IDFC Limited, through its subsidiaries, operates as a non-banking financial company in India. We expect NII to grow at CAGR of ~23% over FY18E-20E led by ~20% growth in credit. Among segments, faster growth is expected to come from retail. Expansion of banking business and non-interest income growth from AMC and securities business will lead to strong loan book growth. Its NIM is expected to expand by ~20bps yoy to 2.30% in FY18E. We foresee non-interest income to grow by ~16% yoy in FY18E supported by the Infra Development Fund worth ~Rs440cr. Alternative Investment Fund is expected to benefit from PE deals and infra debt management. Due to higher granularity, we expect NPA to improve in FY18E. It has increased its focus on branch efficiency, which should improve cost/income ratio.

Year Net Profit (Rs Cr) EPS (Rs) PE (x) P/BV
FY18E 851 5.3 9.8 0.7
FY19E 1,193 7.5 7.0 0.6
FY20E 1,445 9.1 5.7 0.6

Source: 5paisa research

SJVN

SJVN is a power generation company which operates hydro, wind and solar plants. The total power generation capacity at the end of FY17 stood at 1,964.6MW. Hydroelectric sources generate power of 1,912MW with wind and solar accounting for 47.6MW and 5MW respectively. SJVN is also planning to set up a 1,320MW thermal power plant at Buxar, Bihar. The company has committed to develop 1,000MW of solar power generation capacity over the next 5-7 years. We expect the company to report revenue CAGR of 7% over FY18E-20E aided by near ~100% utilization levels over FY18E-20E. We foresee EBITDA CAGR of 6.9% over FY18E-20E aided by better utilization of new capacity added by the end of FY19E. We expect PAT CAGR of 6.9% over FY18E-20E.

Year Net Sales (Rs Cr) OPM (%) Net Profit (Rs Cr) EPS (Rs) PE (x)
FY18E 2,669 78.8% 1561 3.8 9.2
FY19E 2,856 78.7% 1,691 4.1 8.5
FY20E 3,055 78.6% 1784 4.3 8.1

Source: 5paisa research

Disclaimer: Stocks mentioned in this article are not stock recommendations. They get mention in the story on the basis of their performance.

Research Disclaimer

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5 Penny Stocks which are not Penny

07 Aug 2019 Nikita Bhoota

Penny stocks are the ones which trade at a very low price. Usually, these stocks lack liquidity and carry high risk. The public information available on these stocks/companies is very limited, which makes it difficult for an investor to understand the future prospects of the business. However, penny stocks with good fundamentals and strong business models have the potential to become multi baggers in the long run. Here are some of these stocks.

Sintex Plastics (SPTL)

SPTL was established by transferring the plastic business (66% of FY17 revenue) and the Prefab & Infra business of Sintex Industries (34% of FY17 revenue). Sintex Plastics, a leading player in custom molding business (mainly composites), stands to benefit from growing trend of composites replacing metal parts across industries. Thus, we expect revenue CAGR of 12.8% over FY18E-20E. We see EBITDA CAGR of 15.6% over FY18E20E due to operating leverage and better product mix over FY18E-20E. Owing to the decline in interest outgo, we expect SPTL to post 17.5% PAT CAGR over FY18E-20E. SPTL is done with its capex cycle and has lowered its focus on w/c intensive Prefab & Infra business, thus enhancing cash generation. This will lead to net debt declining by ~Rs1,500cr over FY17-20E.

Year Net Sales (Rs Cr) OPM (%) Net Profit (Rs Cr) EPS (Rs) PE (x)
FY18E 5,996 15.0% 332 5.6 11.6
FY19E 6,757 15.3% 392 6.6 9.9
FY20E 7,635 15.7% 458 7.8 8.4

Source: 5paisa research

NHPC

NHPC is a hydropower generation company with power generation capacity of 5,171MW in FY17. The company generated 23,275mn units of electricity against a target of 23,000 for FY17. The company is planning a significant expansion of power generation capacity over the coming years. A total of 8,481MW is currently under the clearance/approval stage. This includes plans to setup a thermal plant (1,320MW capacity) through a joint venture. We expect the company to report revenue CAGR of 18.1% over FY18E-20E aided by 7.2% CAGR in generation volumes and Plant Load Factor (PLF) remaining at 62-63% over the same period. We see EBITDA CAGR of 28.2% over FY18E20E aided by better utilization of newly added capacity. We expect PAT CAGR of 20.8% over FY18E-20E.

Year Net Sales (Rs Cr) OPM (%) Net Profit (Rs Cr) EPS (Rs) PE (x)
FY18E 9,031 57.3% 2855 2.8 9.9
FY19E 10,700 63.3% 3,593 3.5 7.9
FY20E 12,600 67.4% 4167 4.1 6.8

Source: 5paisa research

MEP Infra

MEP Infrastructure is independently and collectively engaged in toll projects, OMT (Operate, Manage & Transfer), Hybrid Annuity Model (HAM) and BOT. Due to MEP's JV with San Jose India, it is strategically planning to extend its road development portfolio based on HAM. It has bagged 5 new projects under HAM model worth Rs3,230cr.  MEP has achieved the first milestone for the Nagpur, Package-II and Mahuva to Kagavadar project. The Authority paid the first milestone payment (20% of physical progress) for Nagpur, Package-II and Mahuva to Kagavadar. The appointment date for other two HAM projects is expected shortly. The company has started collecting toll from 124 entry points to Delhi. EPC order book of Rs3,000cr also provides strong revenue visibility. Thus, we expect 27% CAGR in revenue over FY18E-20E. We see PAT CAGR of 39% over FY18E-FY20E.

Year Net Sales (Rs Cr) OPM (%) Net Profit (Rs Cr) EPS (Rs) PE (x)
FY18E 2,444 44.2% 67 4.1 20.9
FY19E 3,877 33.3% 116 7.2 12.0
FY20E 3,994 33.6% 124 7.6 11.3

Source: 5paisa research

IDFC Ltd

IDFC Limited, through its subsidiaries, operates as a non-banking financial company in India. We expect NII to grow at CAGR of ~23% over FY18E-20E led by ~20% growth in credit. Among segments, faster growth is expected to come from retail. Expansion of banking business and non-interest income growth from AMC and securities business will lead to strong loan book growth. Its NIM is expected to expand by ~20bps yoy to 2.30% in FY18E. We foresee non-interest income to grow by ~16% yoy in FY18E supported by the Infra Development Fund worth ~Rs440cr. Alternative Investment Fund is expected to benefit from PE deals and infra debt management. Due to higher granularity, we expect NPA to improve in FY18E. It has increased its focus on branch efficiency, which should improve cost/income ratio.

Year Net Profit (Rs Cr) EPS (Rs) PE (x) P/BV
FY18E 851 5.3 9.8 0.7
FY19E 1,193 7.5 7.0 0.6
FY20E 1,445 9.1 5.7 0.6

Source: 5paisa research

SJVN

SJVN is a power generation company which operates hydro, wind and solar plants. The total power generation capacity at the end of FY17 stood at 1,964.6MW. Hydroelectric sources generate power of 1,912MW with wind and solar accounting for 47.6MW and 5MW respectively. SJVN is also planning to set up a 1,320MW thermal power plant at Buxar, Bihar. The company has committed to develop 1,000MW of solar power generation capacity over the next 5-7 years. We expect the company to report revenue CAGR of 7% over FY18E-20E aided by near ~100% utilization levels over FY18E-20E. We foresee EBITDA CAGR of 6.9% over FY18E-20E aided by better utilization of new capacity added by the end of FY19E. We expect PAT CAGR of 6.9% over FY18E-20E.

Year Net Sales (Rs Cr) OPM (%) Net Profit (Rs Cr) EPS (Rs) PE (x)
FY18E 2,669 78.8% 1561 3.8 9.2
FY19E 2,856 78.7% 1,691 4.1 8.5
FY20E 3,055 78.6% 1784 4.3 8.1

Source: 5paisa research

Disclaimer: Stocks mentioned in this article are not stock recommendations. They get mention in the story on the basis of their performance.

Research Disclaimer