Do low prices penny stocks generate bigger returns? This study reveals eye opening facts – Market News

Investing in penny stocks- those trading below Rs 10 or Rs 20 often comes with high risks, but nevertheless some have delivered surprising returns over time as well. While many of these stocks remain volatile and speculative, a few have managed to turn small investments into significant gains. Over the past five years, some low-priced stocks have surged multifold, rewarding patient investors, while others have struggled or faded away.

Let’s take a look at 5 penny stocks under Rs 10 and how they have performed so far from the recent performance to the last five years.

Vodafone Idea

The third largest telecom operator, the Vodafone Idea share price is trading at around Rs 8 per share as of the latest. The share price of the company has seen steep declines in the short term. In the past month alone, the share price has dropped 11%, while in the last six months, it has fallen nearly 50%. However, if we zoom out to a five-year timeline, the share price of Vodafone Idea has gained 105%.

The telecom operator was also in the spotlight recently for its upcoming 5G rollout. Vi plans to launch 5G services in key cities starting March 2025, beginning with Mumbai, followed by Delhi, Bangalore, Chandigarh, and Patna in April.

Apart from this, earlier in September 2024 the company secured deals worth $3.6 billion with Nokia, Ericsson, and Samsung for network expansion over the next three years.

In the Q3FY25 earnings, the company reported a reduced net loss of Rs 6,609.3 crore, down from Rs 6,986.7 crore in the same period last year. Furthermore, the revenue saw a 4.16% increase, reaching Rs 11,117.3 crore compared to Rs 10,673.1 crore in the previous year.

Despite financial struggles, Vi received an equity infusion of Rs 1,910 crore from its promoters, offering some relief. However, its debt from banks stood at Rs 2,330 crore as of December 31, 2024.

Historical data suggests February has been a tough month for Vodafone Idea’s follow-on public offering (FPO). Over the last 16 years, the stock has delivered negative returns in 11 instances.

Gujarat Toolroom

This small-cap stock has delivered a staggering 3,266.67% return in five years. As of the latest, the share price of the Gujarat Toolroom is trading at around Rs 2 per share, but its short-term performance tells a different story. In the past one month, it has crashed 83%, and in the last year, it has fallen 70%.

Looking of the latest developments of the company, it has recently declared its first-ever 5:1 bonus share issue, and pushing its stock up by 5% to Rs 18.08.

Furthermore, the company’s Q3FY25 net profit saw a sharp 90% decline year-over-year, settling at Rs 1.43 crore. However, revenue surged 76% to Rs 230.74 crore in the same period.

Looking at the financial achievement, the company has become debt-free for the first time in five years. The company also raised Rs 95.66 crore through a QIP, allotting 31% stake to institutional buyers

Gujarat Toolroom has been a standout performer, delivering maximum monthly returns to investors in December. In 2024 alone, the stock closed positive in 7 out of 12 months.

Jaiprakash Associates

Commonly known as Jaypee Group, this stock is currently trading at around Rs 4.20 per share. Over the past five years, it has jumped 121%, but the short term performance remains weak. The share price of Jaiprakash Associates has dropped 16% in the last month, 49% in six months, and 82% in one year.

The company’s Debt-to-EBITDA ratio stands at 13.44 times. It has reported a net loss of Rs 546 crore, a 262.2% decline compared to the previous four-quarter average. The Debt-to-Equity ratio is at -3.89 times.

On the investor front, institutional shareholders have reduced their stake by 1.1% over the previous quarter, now holding 10.6% of the company’s shares.

On a monthly average basis in 2024, Jaiprakash Associates provided positive returns in just 4 out of 12 months. Over the entire year, the stock recorded a steep decline of nearly 68%.

RattanIndia Power

RattanIndia Power, a power generation company, has seen significant fluctuations in its share price over the years.

In the last trading session, the share price of RattanIndia Power was trading at Rs 9.60 per share. Over the past five year, the stock has delivered a massive 276.47% return.

However, recent trends tell a different picture. In the last six months, the stock has fallen by 39.74%, and in the past month alone, it has dropped by 14.36%.

RattanIndia Power’s Debt-to-EBITDA ratio stands at 14.92 times. The company reported a net profit of Rs 4.33 crore in Q3FY25, marking a turnaround from previous.

For December 2024, revenue stood at Rs 824.24 crore, growing 6.85% from the previous quarter. EBITDA came in at Rs 181.22 crore, slightly lower than Rs 182.9 crore in the prior quarter.
losses.

However, net sales declined to Rs 733.32 crore, and operating profit dropped to Rs 90.30 crore.

RattanIndia Power delivered a 52% return in 2024, with 4 out of 12 months in the green.

Franklin Industries

Previously known as Murad Properties and Projects, Franklin Industries is a leading provider of contract farming services. Looking at a longer time frame, the company has delivered a return of nearly 46% over the past five years. However, in the shorter term, its stock has declined by 4% in the last month, and recorded a 3% decline over the past year. However, on a 6 month basis, it surged nearly 7%.

Franklin Industries emerged as a steady performer, delivering positive returns in 8 out of 12 months in 2024, a 86.96% gain

Penny stocks can deliver extraordinary gains over the long term, but they also come with extreme volatility. While some have multiplied investors money but on the flip side have erased wealth in a matter of months as well.

However, it is important to note that investing in such stocks requires careful analysis, timing, and risk management to understand the unpredictable swings.

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