4 Penny Stocks Recently Bought by FIIs to Add to Your Watchlist

Foreign Institutional Investors (FIIs) are viewing the Indian market through an optimistic lens. In fact, they have begun actively seeking undervalued opportunities in penny stocks.

This shift in FII sentiment presents a positive opportunity for retail investors. Institutional money often flows into fundamentally strong companies before broader market recognition.

In this editorial, we will discuss 4 penny stocks seeing FII buying.

Read on...

#1 Sigachi Industries

The first company in our list is Sigachi Industries Ltd (SIL). It's India's largest manufacturer of Micro-Crystalline Cellulose Powder (MCCP) and ranks among the top 5 globally.

The company have a diverse presence across pharma excipients, nutraceuticals, and food sectors. It's also strategically expanding into active pharmaceutical ingredients (APIs) and speciality chemicals for vertical integration.

The company's growth pipeline includes Croscarmellose Sodium development, co-processed MCCs, and 3D printed pharmaceuticals.

Sigachi operating 5 manufacturing facilities in Telangana, Gujarat, and Karnataka with international subsidiaries in the UAE and the US. The company serves 500+ customers in 65+ countries.

FII holding increased from just 0.08% in March 2025 to 2.89% in June 2025, a huge increase over a three month period.

Sigachi Industries delivered impressive financial results in FY25. The company's revenue jumped 25.42% YoY from Rs 3,989 million (m) in FY24 to Rs 5,003 m in FY25.

The main product, Micro-Crystalline Cellulose (MCC), performed well with 35.75% revenue growth. This robust growth in MCC revenue was due to high demand leading to a ramp-up in utilisation.

The net profit also grew 23.25% YoY, rising from Rs 572 m to Rs 705 m. The company's operating profit surged 46.21% YoY. The operating margin for FY25 improved to 22.38% from 19.2% in FY24.

However, there was a serious accident at one of its factories in June 2025, which created some concern. A rating agency has put the company under review because of this incident. The company has insurance and backup plans, such as using other factories to meet the demand.

#2 Vishal Fabrics

Second on our list is Vishal Fabrics, a textile contract manufacturing company specialising in denims.

The company generates revenue through textile production, job work, lease rentals, and chemical sales, showing a diversified business approach within the textile sector.

It's targeting denim exports to Europe, Latin America, and Africa with a goal of 5 lakh meters this year. The company aims to significantly boost its sales from the current Rs 6.5 bn to Rs 8.5-10 bn, a potential growth of 30-50%.

This expansion isn't limited to international markets. The company is also focusing on domestic opportunities, particularly targeting brands in major cities like Mumbai and Bengaluru.

What makes the company unique is its high-capacity utilisation of 85-90%, indicating efficient operations and strong demand for its products.

FII holdings increased from 3.21% in March 2025 to 8.72% in May 2025.

Examining the financial numbers, the company reports mixed results for FY25. Revenue grew modestly by 4.8% to Rs 15.2 bn.

The net profit increased 12.8% in FY25. The improvement in financials after a challenging FY24 demonstrates operational resilience.

#3 Nandan Denim

The third company in our list is Nandan Denim. It specialises in manufacturing, trading, and exporting denim products including knit denim, basic denim, lightweight shirting, poly dobby, cotton dobby, and various printed denims.

Nandn Denim has a focus on research and development to create high-quality products, including super-stretch and two-way stretch denims, novel weave designs, and sustainable fibre blends.

The company exports to over 15 countries through a dealer-distribution network and serves numerous international and domestic brands.

With an in-house creative design studio, Nandan Denim has a strategy of technological advancement with a commitment to sustainability.

FII holdings jumped from 0.58% in March 2025 to 1.4% in June 2025.

The company's revenue surged from Rs 10.9 bn in March 2021 to Rs 35.5 bn in March 2025.

In the March 2025 quarter, the company achieved a revenue of Rs 10.5 bn and Rs 106.3 m net profit.

#4 Modern Threads

The fourth company in our list is Modern Threads. It was established in 1980 and is one of India's leading manufacturers and exporters of yarn products.

The company started with industrial yarn and sewing thread production but has successfully expanded into synthetic blended grey, dyed, and fancy yarn manufacturing.

It's one of India's largest producers of wool and blended worsted yarn and operates specialised facilities including a modern woollen division in Bhilwara, Rajasthan.

Modern Threads has positioned itself for future growth by embracing sustainability trends.

The company manufactures and exports products certified under the Responsible Wool Standard (RWS) and Global Recycled Standard (GRS), which will meet the growing demand and give the company a competitive advantage in international markets where eco-friendly materials are increasingly preferred.

FII holding increased from nil in March 2025 to 1.26% in June 2025.

Looking at Modern Threads' financial performance, revenue from operations declined by 13.5% from Rs 3 bn in FY24 to Rs 2.6 bn in FY25. The fall in profitability was even higher, with net profit decreasing from Rs 254 m in FY24 to just Rs 34 m in FY25.

This drop in profitability, despite a relatively smaller revenue decline, suggests the company is struggling with cost management and operational efficiency.

Conclusion

The surge in FII interest across these penny stocks reflects a shift toward identifying undervalued opportunities in India's evolving market landscape.

While some companies have good financials with margin expansion, others show growth opportunities despite mixed results.

This diverse performance range from strong revenue growth and sustainability initiatives to significant financial challenges, highlighting the importance of being highly selective when considering penny stocks.

Investors should carefully evaluate an individual company's fundamentals, risk factors, and growth catalysts rather than following institutional movements blindly, as foreign interest alone doesn't guarantee future performance or investment success in this volatile segment.

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...