Top Performing Penny Stocks of September 2023

For a lot of investors, penny stocks could be the best asset class category over the past 1, 3 or 5 years, rewarding them with abnormal gains from time to time.

And yet, many traditional investors remain on the sidelines.

Why?

Among other reasons, penny stocks are just different. Investors often stay away because of low liquidity, no visibility or coverage, and because of their unestablished business.

You can't value them like you do other stocks.

However, as we mentioned above, they can be intimidating to many investors. These stocks hold the promise of providing multibagger gains within a matter of months.

So, which penny stocks delivered multibagger returns in the month of September 2023?

Let's take a look...

#1 GVK Power & Infra

First on the list is GVK Power & Infra.

The company primarily deals in the business of providing operation and maintenance services, manpower & consultancy services, and incidental services to owners of power plants, airports, and infrastructure companies.

The power stock has gained a lot of traction in the past one month, registering gains of around 150% in September 2023.

In the past one year, the stock is up nearly 280%.

Ever since it reported Q1 results in August 2023, shares of GVK Power have run-up sharply. The company posted consolidated net profit of Rs 2.8 billion (bn) for the June 2023 quarter on the back of lower expenses.

It had posted a net loss of Rs 4 bn in the same quarter a year ago.

The rally in the past one month could also be attributed to the smart metering theme catching up and stocks in any way related to the theme surging to a great extent.

The company recently saw some top-level exits. Anicattu Issac George resigned fromthe post of whole-time director & CFO in August 2023 while P V Rama Seshu also resigned in the same month from the position of vice president, company secretary & compliance officer.

To know more, check out GVK Power's financial factsheet.

#2 Gujarat Toolroom

Next on the list is Gujarat Toolroom.

The company used to manufacture high precision molds. Currently, it does not have any significant business but it's working on alternative opportunities.

In September 2023, shares of the company moved up by 80%.

In the past one year, shares of the company have gained over 700%!

The recent gains could be attributed to the company's entry into a new market by setting up a new subsidiary and making fresh investment in it.

Gujarat Toolroom is exploring the new market of Dubai in the sector of precious diamonds, stones, gold dore bar and jewellery, by setting up a new wholly owned subsidiary of the company.

According to the exchange filing, the company will invest Rs 500 million in two trenches in its wholly owned subsidiary.

The enthusiasm comes from the fact that retail investors now think this is a power move and it will have major impact on the company's financials.

The company has shown an improvement in its financials in the past two years while its current quarterly earnings also show an improvement in margins.

To know more, check out Gujarat Toolroom's financial factsheet and its latest quarterly results.

#3 Omaxe

Third on the list is Omaxe.

The company is engaged in the business of developing real estate properties for residential, commercial and retail purposes with a presence across 27 cities in 8 states of India.

It has undertaken various projects in the areas of contractual construction, township development, building of commercial complexes, multi-storied apartments, etc.

In the month of September 2023, shares of the company surged over 65%. In the past one year, Omaxe shares are down 19%.

The recent gains could be attributed to the company's participation in a recent bid for the acquisition and development of a railway project.

The Rail Land Development Authority (RLDA) recently invited bids for leasing of railway land for development and redevelopment of Railway Colony at Ludhiana.

Any news surrounding the railway sector has sent stocks soaring and that's the optimism around railway stocks these days.

Meanwhile, the company is making big strides and its collections remain healthy. It had collections of Rs 22.8 bn in FY23 as against Rs 19.1 bn in FY22 and even the collections of the first quarter the company is in for a long run.

Moreover, the sector's revenue is likely to grow as demand for residential housing is expected to remain steady in FY24.

To know more, check out Omaxe's financial factsheet and its latest quarterly results.

#4 Indian Overseas Bank

Fourth on the list is Indian Overseas Bank.

Founded in 1937, Indian Overseas Bank was one of the 14 major banks that were nationalized in 1969.

In the month of September 2023, shares of the bank surged over 55%. In the past one year, shares of the company have surged 169%.

The gains come after the state-owned lender posted a 28% increase in net profit during the first quarter, mainly due to a decline in bad loans.

The bank also improved its asset quality as gross non-performing assets (NPAs) eased to 7.13% of the gross advances by June 2023 compared to 9.12% a year ago.

With the recent gains, the bank has become the best performing stock in the PSU bank index.

Indian Overseas Bank has lowest float among the PSU banks as government of India holds 96.4% stake in the company.

To know more, check out Indian Overseas Bank's financial factsheet.

#5 IFCI

Last on the list is IFCI.

Erstwhile Industrial Finance Corporation of India, IFCI is a state-owned non-banking finance company established to cater to the long-term finance needs of the industrial sector.

The company's financing activities cover various kinds of projects such as airports, roads, telecom, power, real estate, manufacturing, services sector, and other allied industries.

To point out some of IFCI's big projects, it has financed projects including Adani Mundra Ports and GMR Goa International Airport.

In the month of September 2023, shares of the company went up by 54%. In the past one year, shares have gained 156%.

There's no definite reason which could be attributed to IFCI's sudden rally. Volumes have shot up, which has affected liquidity.

In the recent past, IFCI has been flawless when it comes to debt repayments while it has also made recoveries from non-performing advances (NPAs) and divest some of its non-core assets.

Over the years, rising NPAs and consistent yearly losses have remained a cause for concern for investors in IFCI.

IFCI plays an important role as it manages more than 10 of the government's production-linked incentives (PLI) schemes. Earlier this year, IFCI was also selected to manage and help streamline the Rs 100 billion (bn) FAME-II scheme.

To know more, check out IFCI's financial factsheet.

Which Other Penny Stocks Rallied in September 2023?

Apart from the above, here's a list of penny stocks that gained the most in the month gone by.

Company	Current Price	Marketcap (million)	Gains (%)
Sulabh Engineers & Services Ltd.	7.8	786	111%
USG Tech Solutions Ltd.	7.7	303	92%
Sagar Productions Ltd.	4.0	160	89%
NMS Resources Global Ltd.	51.8	156	81%
Monotype India Ltd.	0.5	380	80%
Ashiana Agro Industries Ltd.	12.7	58	80%
Hemadri Cements Ltd.	73.5	490	78%
Fundviser Capital (India) Ltd.	33.7	124	78%
Gujarat Toolroom Ltd.	22.6	1,254	78%
Zodiac-JRD-MKJ Ltd.	59.9	310	77%
Systematix Securities Ltd.	9.8	49	75%
Cranes Software International Ltd.	6.1	723	72%
Jindal Capital Ltd.	38.2	275	72%
Ankit Metal & Power Ltd.	5.5	779	70%
Informed Technologies India Ltd.	84.3	352	69%

Data Source: Ace Equity

Since you're interested in penny stocks, check out the below screens on Equitymaster's stock screener. We have a separate section specifically for penny stocks.

• Best Indian Penny Stocks with Dividend Growth
• High Dividend Yield Penny Stocks in India
• Debt Free Penny Stocks in India
• Undervalued Penny Stocks in India
• Best Penny Stocks Under Rs 50

Conclusion

A word of caution. There's a genuine risk that these gains might not be sustainable in the long run.

So, what's the best course of action for those interested in these low-priced shares?

First, do your due diligence. Research, analyze, and understand the market.

A good way to select stocks is to look for these parameters:

• Stocks with nil or no promoter pledging
• High promoter stake (preferably above 45%)
• Low debt to equity (preferably below 0.8 times)
• High ROE and ROCE (preferably above 15%)
• Low cash conversion cycle (below 100 preferably) and low receivable days (preferably below 90).
• And of course, also look for consistency in operating profit margins.

Before you go, don't forget to check out the below video where Rahul Shah talks about a fundamentally strong penny stock that should be on your watchlist.

Rahul analyses penny stocks at Equitymaster amongst other things.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...