#Kolkata: Penny stocks are shares of publicly-listed companies that have a very low price, usually as low as Rs.10. The fact that these stocks are so cheap in terms of price gives investors the opportunity to trade in bulk and make money. But investing in penny stocks should be done only after fully understanding the fundamentals and growth potential of the company being invested in and how they work.
Penny stocks are more likely to default and carry risk. This results in two main aspects that an investor needs to keep in mind before investing.
Let’s take a look at some of the best penny stocks of 2023 –
Yes Bank –
Looking at how this stock has performed throughout the year in the range of Rs 12.10 to Rs 20.50 per annum, Yes Bank will be considered a penny stock in 2023. The year has been interesting for Yes Bank thanks to the recent regulatory approval by the Reserve Bank of India, allowing them to have more than 5% ownership in their banks. Global private equity firms Carlyle Group and Advent International have approved 9.99% ownership each in Yes Bank. The bank sold Rs 48,000 crore worth of debt to JC Flowers Asset Reconstruction Private Limited in September and is working to build a clean balance sheet.
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Suzlon Energy Ltd –
Suzlon Energy Limited can create fear among those who want to avoid any risk. When viewed from a penny stock perspective, Suzlon Energy may look promising for 2023. The company posted a consolidated quarterly profit of Rs 56.47 crore vs a loss (YoY) of Rs 13.34 crore in September 2022 and received an order from Indian tycoon Gautam Adani-owned Adani Green Energy in October 2022. The company is determined to reduce debt. Suzlon Energy’s stock offers investors an opportunity to capitalize on the Indian government’s efforts to combat climate change by adopting renewable energy systems.
South Indian Bank –
South Indian banks could be profitable in the penny stock space as they look set to rewrite their fortunes in 2023. This is mainly due to two reasons –
– Private sector banks have been able to reduce their net non-performing assets. 2.51% till September 2022 which was 3.85% year on year. This is a remarkable achievement which will increase further in the coming years, as the bank is working on specific directions.
– The bank’s profit figures at the end of September are noteworthy. South Indian Bank posted a consolidated profit after tax figure of Rs 223.28 crore vs a loss of Rs 187.09 crore (YoY). As the bank grows its customer base, especially non-resident Indians, its fundamentals are expected to improve to present trading opportunities in the stock. The stock rose from Rs 7.25 to Rs 18.15 till December 9 There is more potential for this growth
Reliance Power –
Reliance Power is an attractive penny stock for 2023 backed by strong fundamentals despite posting a tax loss of Rs 303.91 crore in the September quarter which included debt repayments of Rs 390 crore. Reliance Power is in a strong position with an intention to repay Rs 1,500 crore in FY2023. For which the company was able to raise Rs 1,000 crore in debt capital in October Reliance is a part of the Anil Dhirubhai Ambani group. Reliance Power’s stock has traded in an annualized range of Rs 10.95 to Rs 25. The company is committed to fixing the balance sheet by 2023.
But penny stocks are not for those who are investing for the first time or learning to trade. Such stocks are risky and investments can potentially suffer losses, if the company does not overcome adversity. It is their volatile nature that makes penny stocks attractive. That is, if one does not want to take risk, then penny stocks are not the best option as stocks to invest in 2023.
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