Overview of the best stocks under Rs. 50 in India in 2024
With the introduction of the top stocks under Rs. 50 out of the way, let us take a look at the stocks listed above in more detail:
1. South Indian Bank Ltd
Set up in 1929, South Indian Bank provides a wide array of banking services to people in India. This includes corporate and retail banking and para-banking options like mobile, internet, debit card, foreign exchange, and merchant banking.
The current market cap of the bank is Rs. 6,538 crore, with the stock price’s 3-year CAGR at 41%. In addition, the business’s compounded profit growth over the last 3 years has been an impressive 159%. With these metrics and more, the South Indian Bank has consistently outperformed some of the top banks in India.
2. Trident Ltd.
Trident’s operations are diversified, including the textile, paper, and yarn sectors. Owing to its market presence and diverse product line, it can be a reliable investment in the market. The firm’s current market cap is Rs. 19,304 crore, and the stock also has an impressive 5-year CAGR of 46%. By June 2024, the company also had a high level of promoter holdings at 73.19%.
3. Essar Shipping Ltd.
This entity was established in 2010 and works in the domain of chartering services and fleet operations in coastal and international voyages.
The company has a current market cap of Rs. 981 crore, with the previous 1-year stock price CAGR at 302%.
4. Century Extrusions Ltd.
Incorporated in 1988, Century Extrusions produces power transmissions, aluminium extruded products, and distribution lines. The company’s current market cap is Rs. 207 crore, and its share price CAGR in the last 5 years is 56%.
5. YES Bank
This entity is a commercial bank in India, serving a broad range of clients. It has a strong focus on technology-driven services and digital offerings. Its current market cap is Rs. 75,018 crore, and the stock’s 1-year CAGR is 40%.
6. Easy Trip Planners Ltd.
This is an online travel agency based in India. It has a broad range of products and services, which include holiday packages, hotels, and airline tickets. Its current market cap is Rs. 7000 crore, and the business is impressively close to being debt-free. Besides these, the company’s revenue and market share have been steadily climbing, and the stock has a robust 3-year ROE of 40%, which is a good sign for investors.
7. Brightcom Group Ltd.
This business has a global presence, with its digital marketing solutions including software services, ad-tech, and future technologies. It currently has a market cap of Rs. 1384 crore with a 3-year compounded sales growth of 40%.
8. Gothi Plascon (India) Ltd.
Headquartered in Puducherry, Gothi Plascon has been operating in the property and real estate domain since 1994. The firm’s current market cap is Rs. 40.6 crore, with a 5-year stock price CAGR of 43%. It also has a strong ROE, making it an attractive option for investors.
9. Bervin Investment and Leasing Ltd.
This is an Indian NBFC (non-banking financial institution) primarily concerned with leasing and investment activities. Presently, the company has a market cap of Rs. 25.2 crore, with its previous 1-year ROE at 30%.
10. Swarna Securities Ltd.
This company is focused on receiving rental income and the collection of outstanding dues. Its market cap is Rs. 13.4 crore, and the company has shown more robust growth than the industry average in the last 5 years. In addition, its 3-year stock price CAGR is 42%.
11. SC Agrotech Ltd.
Set up in 1992, SC Agrotech was initially called Sheel International. While it began as a dairy product manufacturer, it has broadened its focus to include agriculture, biotechnology, and horticulture. Its current market cap is Rs. 11.8 crore, with a strong compounded profit growth over the last 3 years of 82%.
12. Welcure Drugs and Pharmaceuticals Ltd.
This firm primarily manufactures and markets pharmaceutical formulations. This includes capsules, tablets, antibiotics, dry syrups, vitamins, sulpha drugs, antipyretics, analgesics, and corticosteroids. This share under Rs. 50 has a market cap of Rs. 9.90 crore with a robust one-year stock price CAGR of 109%.
13. NCC Blue Water Products Ltd.
Established in 1992, NCC Blue is a company in the aquaculture sector. It primarily deals with the processes of breeding and processing seafood. It also markets these products. Its current market cap is Rs. 8.03 crore, with a one-year stock price CAGR of 75%.
14. Sobhaygya Mercantile Ltd.
This is also an Indian NBFC, with the business also engaged in a few other financial services. Its market cap at present is Rs. 40.6 crore, and it has a strong 3-year ROE of 37%. The firm has also been actively working to gradually increase its net profits, becoming an attractive pick for investors.
What are the features of shares under Rs. 50?
Stocks priced below Rs. 50 offer several distinctive features that appeal to investors looking for affordable investment options. Here’s a closer look at these characteristics:
- Low price: These stocks are generally more accessible to individuals with modest budgets, making it easier to diversify portfolios even with limited capital.
- Volatility: Shares under Rs. 50 tend to be more volatile, often due to their smaller market presence, which can result in larger price swings.
- Growth potential: Despite their lower prices, these stocks can have significant growth potential if the underlying companies perform well and attract investor interest.
- Diversification opportunity: Investing in low-cost stocks across various sectors can help investors build a diversified portfolio and manage risk effectively.
How to invest in stock under Rs. 50?
If you are looking to invest in stocks under Rs. 50, the first step would be to conduct thorough research that focuses on the targeted stock and its competitors in a similar price range. For this, leverage financial websites and stock screeners. Another prerequisite will be to have a Demat account with a broker that enables you to trade in penny stocks. Finally, once you know which stocks you want to buy, you can add funds to your account and enter the market. Once you have invested, it is also important to continuously track your position, market sentiments, and company fundamentals to maximise profits.
Our selection criteria for the stocks under Rs. 50
Here is what you need to consider to identify undervalued stocks under Rs. 50
1. Market price
This represents the current trading price of a stock and is influenced by demand, supply, and investor sentiment. A low market price does not necessarily indicate poor performance; it might suggest that the stock is undervalued or overlooked by the market. Careful analysis can uncover stocks with potential for future appreciation.
2. Market capitalisation
The company’s market cap reflects its total market value and is calculated by multiplying the stock’s price by its outstanding shares. Stocks under Rs. 50 can range from small- to large-cap firms. Generally, higher market capitalisation indicates stability and liquidity, which may attract more investors. However, evaluating market cap alongside other factors, like debt levels and sector trends, is essential for making informed investment decisions.
3. Low debt-to-equity ratio
This ratio assesses a company’s financial stability by comparing its debt to shareholder equity. A low debt-to-equity ratio is often desirable for stocks under Rs. 50, as it suggests lower financial risk and better resilience during economic fluctuations. Companies with less debt may be in a stronger position to pursue growth opportunities without heavy financial burdens.
4. Competitive advantage
Identifying a company's competitive edge is critical for establishing its long-term sustainability and growth potential. Look for stocks with unique value propositions, significant brand presence, and innovative goods or services that differentiate them from the competition.
5. Past performance
Assessing a stock's previous performance might reveal vital information about its potential growth. Look for firms that have a proven track record of earnings growth, good cash flow, and shareholder returns. While previous performance is not a predictor of future outcomes, it may assist in guiding investing decisions.
6. Dividend yield
Look for stocks with a history of paying dividends to shareholders. Dividend yield is the percentage of dividends paid compared to the stock price and can be a significant consideration for income-oriented investors.
7. Industry analysis
Analyse the industry in which the firm works to better understand its growth opportunities and challenges. Investing in companies from rising industries with promising long-term prospects can improve the chance of favourable returns.
8. Management quality
Research the company's leadership team, including their expertise and track record of business management. Competent and experienced management teams are more likely to make strategic decisions that create long-term value for shareholders.
Factors to consider before investing in stocks under Rs. 50
For investors exploring shares priced below Rs. 50, several factors should be taken into account:
- Assess fundamental strength: Examine the company’s core financial health, including profitability, revenue growth, debt levels, and management quality, to identify stocks with robust fundamentals.
- Conduct thorough research: Avoid impulsive selections by researching thoroughly and aligning stock choices with your investment goals and risk tolerance.
- Industry comparison: Compare the company’s performance with that of its industry peers to understand market dynamics and growth potential.
- Stay updated on news: Keep track of corporate developments, product launches, regulatory changes, and management updates, as such events can significantly affect stock performance.
By considering these factors, investors can identify valuable opportunities among stocks under Rs. 50 while managing associated risks.
Advantages of investing in stocks under Rs. 50
There are several benefits to investing in stocks under Rs. 50. Some of these are:
1. High growth potential
Compared to large-cap stocks, stocks under Rs. 50 have a significant growth potential. There can be several reasons for this; a prominent reason is that these companies are mostly in the nascent stage, with a large growth potential.
2. Portfolio diversification
Investing in stocks at different price levels is a good method of portfolio diversification and goes a long way in enhancing potential returns and minimising risk.
3. Tax benefits
There can also be several tax benefits of investing in these small stocks as the short-term capital gains taxes are lower (recently changed to 20% from erstwhile 15%).
Risks of investing in stocks under Rs. 50
Despite numerous benefits and advantages, investing in stocks under Rs. 50 does come with its own set of risks. These are:
1. Volatility
Stocks under Rs. 50 often face high volatility and price fluctuations, which only certain investors can digest.
2. Limited information
Compared to large-cap companies that release a lot of financial information, companies with shares under Rs. 50 may make limited information available. This can make it difficult for investors to analyse their performance and financial health.
3. Manipulation of the market
Such small stocks are prone to market manipulation by investors and traders. This manipulation can result in increased risk and price distortions in the market.
Conclusion
Investing in undervalued stocks under Rs. 50 provides a chance at growth without requiring a large investment. Investors may uncover promising stocks with good fundamentals and growth prospects by using our selection criteria and conducting extensive research. However, it is critical to exercise caution and avoid falling into the promise of quick gains, as these stocks carry higher levels of risk.
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