In the vast landscape of the Indian stock market, hidden gems often lurk beneath the surface, waiting to be discovered by astute investors. This article delves into a selection of Best stocks under ₹20 with strong financials, that boast strong financial foundations and intriguing growth prospects.
From energy powerhouses to steel innovators, and from rice exporters to agricultural commodity traders, these companies span diverse sectors of the economy. Each has a unique story of resilience, adaptation, and ambition. As we explore their histories, recent financial performances, and future outlooks, you will gain valuable insights into potential investment opportunities that may have flown under the radar of many market watchers.
List Of Best stocks under ₹20 With Strong Financials
Jaiprakash Power Ventures
Jaiprakash Power Ventures, founded by visionary entrepreneur Jaiprakash Gaur, has been a key player in India’s power sector since its incorporation in 1994. Initially, the company focused on hydroelectric projects, but over time, it has diversified its portfolio to include thermal power generation, coal mining, and cement grinding operations.
Notably, the company operates the flagship 1320 MW Nigrie thermal power plant in Singrauli, Madhya Pradesh, which has recently set an impressive record for uninterrupted operation. Furthermore, Jaiprakash Power Ventures boasts an enviable mix of hydro and thermal assets, positioning it as a versatile energy provider in the country.
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In terms of financial performance, Jaiprakash Power Ventures demonstrated remarkable growth in fiscal year 2023-24. The company’s revenue surged to Rs. 6,762.78 crore from Rs. 5,786.67 crore, a 16.9% increase year-over-year. Notably, the company achieved its highest-ever net profit of Rs. 1,021.95 crore, a significant jump from Rs. 55.42 crore in the previous year.
Improved operational efficiencies led to an impressive operating profit margin of 30.25%, up from 21.1% in 2023. The company also reduced its debt from Rs. 4,760.58 crore to Rs. 4,246.04 crore, further strengthening its financial position.
Looking ahead, Jaiprakash Power Ventures is poised for continued expansion and innovation. The company is actively exploring opportunities in renewable energy, particularly in the hydropower sector. Additionally, it is considering venturing into solar power projects and potentially even small-scale nuclear plants.
In compliance with environmental regulations, the company is investing approximately Rs. 1,500 crore in installing flue gas desulfurization systems at its thermal plants. This proactive approach to reducing carbon emissions underscores its commitment to sustainable growth. As a result, Jaiprakash Power Ventures is well-positioned to capitalise on emerging opportunities in India’s evolving energy landscape while maintaining its focus on operational excellence and financial stability.
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Rama Steel Tubes
Rama Steel Tubes establishment in 1974 by Naresh Kumar Bansal, Rama Steel Tubes Limited has been at the forefront of India’s steel tube industry. The company has grown into a major producer of steel pipes, tubes, and associated products over the last fifty years.
Rama Steel has positioned itself as a versatile building materials supplier, offering a wide range of products including MS ERW black pipes, galvanised iron pipes, and square sections. The company’s strategic expansion across India, with manufacturing facilities in Delhi NCR, Maharashtra, and Karnataka, has solidified its status as a national manufacturer with considerable logistical benefits.
Rama Steel Tubes financial performance in FY2024 showcased resilience amidst market challenges. While revenue decreased to Rs. 1,046.51 crore from Rs. 1,336.75 crore in FY2023, the company improved its bottom line. Net profit rose to Rs. 29.99 crore, up from Rs. 27.44 crore the previous year.
Notably, operational efficiency gains led to an improved operating profit margin of 5.79%, compared to 3.64% in FY2023. The company also strengthened its financial position by reducing debt from Rs. 192.78 crore to Rs. 145.07 crore. Despite the revenue decline, Rama Steel’s focus on product diversification and operational enhancements contributed to improved profitability and a more robust balance sheet.
Rama Steel Tubes plans significant expansion and innovation. They aim to increase capacity to 500,000 tons by FY2025. The company pursues a strategy to enhance value-added products, expanding SKUs from 1,300 to 2,500 next year.
This shift to higher-margin products will boost overall profitability. With a Rs. 120 crore order book, including government contracts, Rama Steel capitalizes on India’s infrastructure growth. The company expects 35–40% year-on-year growth, solidifying its position in the Indian steel tube industry.
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Sarveshwar Foods
Sarveshwar Foods(SFL) is a renowned player in the basmati rice industry, tracing its roots back to 1890, when it was founded by Shri Mulamal Ji. The company’s rich heritage spans over a century, with the business passing down through generations before being formally incorporated in 2004.
Based in the strategic location of Jammu and Kashmir, SFL leverages the region’s ideal agro-climatic conditions to cultivate premium basmati and non-basmati rice. The company’s core operations involve processing and marketing branded and unbranded rice products for both domestic and international markets. With a strong focus on quality and sustainability, SFL has established itself as a key player in India’s burgeoning rice export sector.
SFL’s financial performance in FY2024 showcased impressive growth and profitability. The company’s revenue surged to Rs. 869.59 crore, a substantial 26.2% increase from Rs. 689.32 crore in FY2023. Notably, SFL’s net profit skyrocketed to Rs. 275.50 crore, compared to Rs. 7.80 crore the previous year, reflecting exceptional bottom-line improvement.
Operational efficiency gains led to an enhanced operating profit margin of 7.19%, up from 5.81% in FY2023. However, the company’s debt increased to Rs. 298.25 crore from Rs. 247.86 crore. Despite this, SFL’s overall financial performance demonstrates its ability to capitalize on market opportunities and drive significant profit growth, even as it manages increased leverage to support expansion.
Looking ahead, Sarveshwar Foods Limited has outlined an ambitious growth strategy. The company aims to expand its domestic market penetration by entering high-demand regions and targeting over 2 lakh retail stores in rural areas within the next five years.
Additionally, SFL is focused on broadening its product range to cater to diverse consumer needs, particularly promoting organic products under the “Nimbark” brand for urban consumers. In line with its commitment to sustainability, the company has set goals to transition 80% of its product packaging to recyclable or biodegradable materials by 2025 and achieve net-zero carbon emissions by 2030. These forward-looking initiatives, coupled with plans to enhance vertical integration and diversify distribution channels, position SFL well to capture increasing industry opportunities and drive sustainable growth.
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Sakuma Exports
Sakuma Exports traces its roots back to December 1, 1998, when it was established as a partnership firm in Mumbai by the late Mr. Chander Mohan Malhotra. Initially operating as a trading entity, the company later evolved and was formally incorporated as a public limited company on August 31, 2005, under Part IX of the Companies Act, 1956.
Today, Sakuma Exports has grown into a prominent player in the agricultural commodities sector, specialising in the buying, processing, marketing, and exporting of bulk commodities such as sugar, edible oils, oil seeds, pulses, and cotton. Furthermore, the company has expanded its offerings to include innovative financial structured products linked to physical commodities.
Sakuma Exports financial performance in FY2024 reflected the volatility of agricultural markets. Despite a revenue decrease to Rs. 2,124.66 crore from Rs. 3,173.15 crore in FY2023, the company improved its profitability. Net profit rose to Rs. 39.97 crore, up from Rs. 28.45 crore the previous year, showcasing enhanced operational efficiency.
This improvement was further evidenced by an increased operating profit margin of 2.43%, compared to 1.45% in FY2023. However, the company’s debt significantly increased to Rs. 99.05 crore from Rs. 16.86 crore, possibly indicating investments for future growth. These results demonstrate Sakuma’s resilience in navigating challenging market conditions, balancing revenue fluctuations with improved profitability, while strategically leveraging debt for potential expansion.
Looking ahead, Sakuma Exports Limited is poised for potential growth and expansion. The company has recently shifted its business strategy to focus more on domestic trade, particularly in response to export restrictions on sugar imposed by the government.
Consequently, Sakuma has successfully established depots in Bihar, West Bengal, and the northeastern region, achieving significant growth in domestic sugar sales. Moreover, the company has diversified into supplying maize to multigrain refineries for ethanol production and expanded its pulse supply business domestically.
To further strengthen its position in the international market, Sakuma Exports has invested $10 million in its UK subsidiary to facilitate global commodity trading. In light of these initiatives, the company maintains a positive outlook for sustaining growth and profit margins in the coming years.
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Davangere Sugar Company
Davangere Sugar Company, incorporated in 1970, has emerged as a prominent player in the sugar manufacturing industry. Initially established as a joint sector venture by Karnataka state entities and financial institutions, the company was later acquired by the Shamanur Group in 1995.
Under the astute leadership of Mr. S.S. Ganesh, who has been at the helm as Managing Director since 2002, Davangere Sugar has expanded its operations significantly. The company’s core business revolves around sugar production from sugarcane, with molasses as a valuable by-product, and co-generation of electricity.
Davangere Sugar’s financial performance in FY2024 reflected resilience amid market challenges. While revenue decreased to Rs. 216.53 crore from Rs. 279.94 crore in FY2023, the company maintained strong profitability. Net profit slightly dipped to Rs. 12.24 crore from Rs. 13.32 crore, yet operational efficiency improved significantly.
The operating profit margin rose to 23.22% from 20.09% in the previous year, demonstrating enhanced cost management. However, the company’s debt increased to Rs. 264.14 crore from Rs. 244.63 crore, possibly indicating strategic investments. Despite revenue contraction, Davangere Sugar’s focus on operational excellence, particularly in its ethanol segment, contributed to improved margins and sustained profitability, showcasing its adaptability in a dynamic market environment.
Looking ahead, Davangere Sugar is well-positioned for future growth and expansion. The company boasts a significant land bank of 150 acres, valued at approximately INR 450 Cr, providing ample opportunities for future development.
Additionally, the growing demand for ethanol, driven by government mandates to increase the ethanol blending ratio to 20% by 2025, presents a lucrative opportunity. Coupled with its track record of successful operations and superior asset utilization, Davangere Sugar is poised to capitalize on these prospects. However, the company must remain vigilant of potential threats such as competition from surrounding sugar mills, political uncertainties, and evolving government regulations.
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Conclusion
In conclusion, these five stocks under Rs. 20 demonstrate resilience and potential in diverse sectors of the Indian economy. From power generation to steel manufacturing, rice exports to sugar production, each company showcases unique strengths and growth strategies.
While facing various challenges, they have exhibited improved profitability, operational efficiencies, and strategic expansions. However, it’s crucial to remember that past performance doesn’t guarantee future results. As an investor, how would you assess the balance between the opportunities these companies present and the inherent risks in small-cap stocks?
Written by Fazal Ul Vahab
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