Diwali to Diwali: Best Performing Penny Stocks of 2023

In case you're not familiar with penny stocks, consider them as the wildest category of stocks on the stock market.

These stocks usually get very low volume in daily trading, less regulatory oversight, and are extremely prone to pump and dump schemes.

I know what you're thinking.

I usually keep the disclaimers towards the end of the article in footnotes, but I think it's pretty important to know that none of this is financial advice.

It is pure data backed research to consider this as a thought experiment and then have your own take on it.

Coming back to penny stocks...

The problem with these stocks is that the current format of reporting heavily focuses on their stock prices. You will hardly see in the news a snapshot of its key business metrics, rather you'll find various narratives around them.

But the fact that penny stocks are small is what makes them so attractive. You cannot 10x your investment putting it into a blue-chip company such as TCS or Infosys since the company is too big to make big moves in a short period of time.

If you're able to do adequate research around the company and also have the stomach to experience some extreme swings, penny stocks could be the perfect investments for you.

In today's article, we take a look at the best performing penny stocks from last Diwali to this Diwali.

We've considered stocks trading below share price of Rs 100 on last Diwali day, i.e. 24 October 2022 and the fastest growing ones since then.

#1 Lloyds Enterprises

Trading at less than Rs 5 in November last year, Lloyds Enterprises has delivered 722% returns since last Diwali and currently trades at Rs 38.

It peaked at Rs 48 in October 2023.

Lloyds Enterprises is engaged in the business of trading steel products. Its products include hot rolled coils, cold rolled steel sheet mild steel and hot rolled plate.

The steep rally in its stock price could be attributed to the out-of-the-box FY23 performance where the company's operating margins climbed to double digits.

The company has continued its good performance in the first two quarters of FY24 and as a result, its stock price has spiked even more starting July 2023.

According to its annual report, Lloyds Enterprises has investments of around Rs 14.9 bn out of which Rs 8.6 bn is the value of investment in its subsidiary Lloyds Steels.

The government's continued efforts to boost the Indian economy has helped companies like Lloyds Enterprises, which are primarily engaged in the industrial and engineering segment.

In September this year, the company entered into a partnership agreement with Lloyds Metals & Minerals Trading LLP, indirectly extending its holding in the group companies.

Promoters of the company hold a major chunk of its shares, around 74%, while foreign investors (FIIs) have started to show some interest by adding exposure continuously for the past 4 quarters.

To know more, check out the latest shareholding pattern of Lloyds Enterprises.

#2 Gayatri Sugars

Next on this list is Gayatri Sugars.

Trading at around Rs 4 in November last year, shares of the sugar company have rallied over 500% since last Diwali.

The company currently trades at Rs 25 and has a marketcap of Rs 1.5 billion (bn).

It recently touched its 52-week high of Rs 29.4 on 2 November 2023.

The company has diversified its business well, despite it being a relatively small player. It's engaged in 4 segments.

• Sugar
• Green Power
• Distillery Products
• Hand Sanitizers

Gayatri Sugar's distillery unit is modified to manufacture ethanol which also makes it a beneficiary of the ethanol megatrend.

Meanwhile, it also started producing hand sanitizers during the Covid period.

Under the power segment, it has a power purchase agreement (PPA) with Government of Telangana for supplying power to the grid.

Since the company has all three things - sugar mills, distillery and power generation units, it enjoys the benefit of converting by-products of sugar into ethanol.

After reporting losses for four consecutive years, Gayatri Sugars turned profitable in FY23 and looks set to surpass that profit figure this year.

The company is set to announce its second quarter earnings on 14 November 2023.

The latest shareholding pattern of Gayatri Sugars also shows that promoter holding has increased to 60% in September 2023 from 55 in June 2023. Increasing promoter holding is always a good sign, even more so if it's a penny stock.

#3 Suzlon Energy

Next on this list is Suzlon Energy.

You probably thought of this penny stock when you opened this article, didn't you?

Trading at around Rs 8 in November last year, shares of Suzlon Energy have rallied over 300% since last Diwali and rallied how!

After finding no takers, the stock is suddenly finding more buyers these days as things seem to be turning around.

Suzlon Energy currently trades at Rs 38 with a marketcap of Rs 517.2 bn.

Back in November 2022, Suzlon had reported losses in 7 of the last 10 financial years, had no stability in topline as well as bottomline whatsoever and had a negative net worth combined with huge debt on the balance sheet.

In short, it was a train wreck that was fast hurtling towards disaster.

Some might argue that the 5x gains that the investors earned in Suzlon over the next 12 months was more luck than skill it seems at the first glance.

Suzlon may have had a troubled past but it was a genuine turnaround candidate and hence, there was a skill involved in terms of predicting its turnaround.

Therefore, those who predicted the company's turnaround deserve to be rewarded.

The company is making some serious efforts towards getting debt free. It recently raised Rs 20 billion (bn), of which Rs 15 bn would go towards debt repayment, and the balance will be for working capital and capex purposes.

This would mean that Suzlon's balance sheet would be net debt free after a sort of hiatus of 15 years.

With all these developments, it appears that Suzlon has put behind its financial troubles and is off to a fresh start.

This is one of the reasons why the shares of the company have been on roll.

Going forward, Suzlon Energy is focused on expanding and increasing the capacity of its 3-MW turbines. The company's order book, consolidated at 1.6 gigawatts, is comprised of 55% 3-MW turbines and 45% 2-MW turbines.

India, one of the world's largest energy markets, holds substantial promise. Wind energy, contributing 40.3 gigawatts, represents 10% of the total installed power in the country.

The renewable wind energy sector is poised for robust growth, offering numerous opportunities for companies like Suzlon Energy within the industry.

No wonder mutual funds and FIIs have added a lot of exposure to the stock in the most recent quarter.

To know more, check out Suzlon's latest shareholding pattern.

#4 Paramount Communications

Trading at around Rs 16 in October last year, Paramount Communications share price has rallied almost 300% since last Diwali.

It currently trades at Rs 64 with a marketcap of Rs 15.3 bn.

If you understand the company's business model, you'll be able to recognize why shares of the company have found so many takers this year.

Paramount manufactures wires and cables comprising of power cables, telecom cables, railway cables, and specialised cables.

The government's focus on the railway sector and towards implementing fast 5G network across the nation has added a lot of demand for components including signalling cables, railway power cables, optical fiber cables, and so on.

Paramount is currently sitting on an order book for these various components among other things. It has an outstanding order book of Rs 3.6 billion as of 30 September 2023.

The company has a prestigious clientele including Indian Railways, RailTel, Tata Projects, Adani Renewables, Adani Power, L&T, Siemens, and others.

Paramount recently acquired Valens Technologies, which is known for its expertise in producing high-density polyethylene (HDPE) pipes, primarily utilized for the underground installation of cables, particularly in telecom projects.

It also spread its wings in a new segment this quarter - the company now manufactures and supplies 66kV power cables. The demand for this product is increasing in line with the need for reliable power transmission solutions, especially in the renewable energy sector.

To know more about Paramount, check out its financial factsheet.

#5 IRFC

Last on this list is railway financing company IRFC.

Last Diwali, shares of IRFC were trading at Rs 21 per share. A year later, the stock is up almost 250% and currently trades at Rs 75 with a marketcap of Rs 968 bn.

It peaked at Rs 93 earlier this year in September 2023 when its marketcap crossed Rs 1 trillion!

The company is the financing arm of the Indian Railways. It is a Government of India Enterprise, under the Ministry of Railways.

IRFC's principal business is to borrow funds from the financial markets to finance the acquisition/creation of assets which are then leased out to the Indian Railways.

The Indian Railways' is reportedly planning to roll out a substantial Rs 250 bn tender to secure a massive fleet of around 60,000 wagons.

This is a major procurement order, expected to boost the revenue and profit of IRFC, which finances the purchase of railway assets.

The railway ministry is also aiming to manufacture trains to export to markets in Europe, South America, and East Asia by 2025-26.

As per the railway ministry, by FY26, India plans to export standard-gauge Vande Bharat trains. The plan, if realised, will place India on par with eight countries that have the capability to manufacture trains with speeds of 180 kmph or more.

IRFC's strong balance sheet size with nil gross NPA, low overheads, and the Indian Railways' huge capex needs, bode well for the company's growth prospects over the long term.

The company is also planning to diversify its financing portfolio. This evolution will encompass new dimensions of railway projects, notably dedicated freight corridors, high-speed rail initiatives, and the development of smart railways.

Recently at the G20 summit, India, US, and Saudi Arabia announced plans to build an economic corridor that would link South Asia with Europe via the Middle East.

This announcement suggests a strong railway and shipping connectivity network among the countries as it integrates railway routes.

Projects like these take decades to fully implement, so it can add a lot of value over the coming years for stocks involved.

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

Which Other Penny Stocks Rallied the Most Since Last Diwali?

Apart from the above, here are some other penny stocks that rallied the most since last Diwali.

Company	Change since last Diwali
Peninsula Land Ltd.	245%
Magnum Ventures Ltd.	228%
Lloyds Engineering Works Ltd.	224%
SBC Exports Ltd.	216%
GVK Power & Infrastructure Ltd.	212%
Bajaj Hindusthan Sugar Ltd.	202%
UCO Bank	198%
SEPC Ltd.	193%
Vascon Engineers Ltd.	168%
Dhanlaxmi Bank Ltd.	150%

Data Source: Equitymaster

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

Happy investing!

Equitymaster wishes you and your family a Happy Diwali and a Prosperous New Year!

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...