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5 Penny Stocks which are not Penny

Yatheendradas C.k. at 09:43 PM - Nov 14, 2017 ( ) Views: 400

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5 Penny Stocks which are not Penny

Penny stocks are the one 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 the stocks.

Suzlon Energy Ltd

Suzlon Energy Ltd (SEL) is a leading provider of renewable energy solutions. It is India’s largest manufacturer of Wind Turbine and Generator (WTG) with an installed capacity of 3600 MW. SEL has a market share of 35% in wind business. The company has signed 340MW PPAs and won bid for solar project in Jharkhand (175MW). This is expected to be commissioned by FY18E.  Thus we expect revenue CAGR of 15% over FY17-FY19E. The current bidding of 1GW will augment market for wind energy from non-windy states. Suzlon, being the largest incumbent player, is expected to benefit from MNRE's target of 175GW power generation by 2022. Its order book, as on FY17 at 1682MW provides good revenue visibility in the near term. The company’s net debt reduced by Rs. 341cr and (FCCBs) worth US$ 30 million were repaid up to FY17. We expect PAT CAGR of 18% over FY17-FY19E.

Year Net Sales OPM Net Profit (Rs Cr) EV/EBITDA (x) PE (x)
FY17 12,714 19.7% 840 6.2 10
FY18E 14,367 19.9% 977 5.4 9
FY19E 16,953 20.2% 1,187 4.5 7

Source: 5paisa research

Sunil Hitech Engineers Ltd

Sunil Hitech Engineers is engaged in the business of EPC across power, construction and infrastructure sector. Its segment includes EPC projects, operation and maintenance of power and steel plant and manufacturing. The government’s plan to spend ~Rs 2.2 lac cr to develop infrastructure in the country is positive for the company. Its order book of Rs 5188 cr provides good revenue visibility. Additionally, the company has bid for projects worth Rs 2,920 cr. The company’s clientele majorly comprises of government enterprises, hence government spending on power is expected to bring traction. Overall, we expect revenue CAGR of 16% over FY17-FY19E. Going forward, we expect improvement in EBITDA margin by 40bps in over FY17-FY19E. We expect PAT CAGR of 24% over FY17-FY19E. Despite operating in capital intensive industry, the company has healthy D/E of 0.7x as on FY17.

Year Net Sales (Rs Cr) OPM Net Profit (Rs Cr) EPS (Rs) PE (x) P/BV (x)
FY17 2,559 7.9% 40 1.0 14 1.0
FY18E 2,892 8.0% 46 1.2 12 1.0
FY19E 3,412 8.3% 61 1.6 9 0.9

Source: 5paisa research

Sintex Industries Ltd

Sintex is textile and yarn manufacturer in India. It operates through its divisions - Bharat Vijay Mills, Sintex Yarns and BVM Overseas Limited. Its revenue comprises of domestic 35% and exports 65% as on FY17. Post demerger, the company has been focusing on commissioning of its Phase 2 production plant. With this, the company expects the capacity to reach 6,00,000 spindles spinning compact yarn. Thereby, we expect revenue CAGR of 12% over FY17-19E. The company’s Phase-1 plant at Pipavav is running at 80% utilization as the GST roll-over resulted in de-stocking by the distributors. Further, with capacity utilization and better realization, we expect EBITDA CAGR of 14% over FY17-19E. We expect high interest and depreciation costs due to expansions getting commissioned, resulting PAT CAGR of 15% over FY17-19E.

Year Net Sales (Rs Cr) OPM Net Profit (Rs Cr) EPS (Rs) PE (x) BVPS P/BV (x)
FY17 2,018 18.2% 134 2.5 11 71.8 0.4
FY18E 2,220 18.4% 151 2.8 10 74.6 0.4
FY19E 2,553 18.8% 179 3.3 8 77.9 0.3

Source: 5paisa research

GMR Infrastructure

GMR Infrastructure develops and maintains transport facilities and generates power. It derived FY17 revenues from Airports (~53%), energy sector (~33%) and rest from road & EPC. Company has won bids to develop and operate greenfield airports in Greece and Goa. Also, Government’s spending of Rs. ~68000 over next five years for development of airport infrastructure is expected to aid revenue growth. Thereby, we expect revenue CAGR of 6% over FY17-FY19E. Further, it is bidding for expansion of Nikola Tesla airport of Belgrade in Serbia and Kingston airport in Jamaica. Besides, Warora power project (600MW) which has turned profitable augurs well for energy segment. Additionally, it is expected to monetise ~Rs.6,000cr assets and ~13,000-acre land to reduce debt further. Under SDR scheme, its debt reduced by Rs17,700 to ~Rs.19800cr. With this, company’s net D/E has come down significantly to 1.5x in FY17 vs 5.1x in FY16.

Year Net Sales (Rs Cr) OPM Net Profit (Rs Cr) EV/EBITDA (x)
FY17 10,999 31.4% -2,114 8.6
FY18E 11,549 31.5% -1,800 8.2
FY19E 12,473 31.5% -1,600 7.6

Source: 5paisa research

South Indian Bank

South Indian Bank is mid-sized private sector bank operating in southern states, with half of its branches in Kerala. The bank has deposits of ~Rs.65791 cr and a loan book of ~Rs.47264 cr as of Q1FY18. We see rise in advances at a 15% CAGR over FY17-19E. This will be aided by shifting focus from big ticket corporate segments to low risk retail and SME loans. Further, rising CASA share and declining credit costs will reduce C/I ratio by 100 bps to 48% by FY19E. Thereby, we see NIMs to remain in the range of 2.7-2.8% in FY18E. Further, the bank has also expedited balance sheet clean-up by recognising entire watch list as NPAs. It has no further large stressed accounts and reduced restructured accounts to Rs.500cr in Q1FY18 versus Rs.571cr in Q4FY17. This is expected to show lower slippages and provisions by FY18E. Thereby, we see GNPAs declining by 40 bps to 2% by FY18E and PAT growing at 30% CAGR over FY17-19E

Year NII (Rs Cr) Net profit (Rs Cr) BVPS (Rs) P/BV (x)
FY17 1,675 393 27 1.2
FY18E 1,888 449 29 1.1
FY19E 2,136 517 32 1.0

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.

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Ambrish Patel at 09:16 AM - Nov 15, 2017 ( )


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