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Penny Stocks that Became Multibagger Stocks

29 March 2022

Penny stocks are looked down upon by many investors. But there are penny stocks that turned out to multibagger stocks. Not just that, some of those penny stocks are now bluechip stocks!

You might not even know – some of the big names you hear now were actually penny stocks at some point in time.

Make no mistake, most of the time, penny stocks are a bad choice. In fact, penny stocks are penny stocks for a reason. Most of them are bad quality stocks. Only some are good. Spotting them is the key to grabbing a multibagger stock.

And before I proceed, let me tell you, if you’ve never invested in any kind of stocks before, stay away from penny stocks. Explore investing in mutual funds instead.

In mutual funds, you basically outsource your stock investments to an expert. The expert is called a fund manager. He will manage your money and ensure you get good returns. This is in exchange for a small fee called the expense ratio.

Learn everything you want to learn about mutual funds here: Beginner’s Guide to Mutual Funds.

Here’s a list of bluechip stocks that were once penny stocks – but are really big and reputed stocks in the Indian stock market today.

1. Eicher Motors

Eicher share price: Rs 2357.9 (as of 16th March 2022)

This company became big primarily because of its motorcycle brand Royal Enfield!

Everybody who invests in stocks talks about Eicher’s success story. Eicher happens to be one of the most popular multibagger stories in India these days. Today, the Eicher share price is hovering greater than Rs 2300.

Can you guess the price of one Eicher stock in 1998?

Around June 1998, the Eicher Motors stock was trading at around ₹9. Yes, ₹9.

In 24 years, this stock has grown nearly 262 times.

No wonder the Eicher Motors share is so popular. It is easily one of the most talked-about stocks in the Indian share market. 

Money invested (₹) Value today (₹) Duration (years) CAGR (%)
1,00,000 2,61,88,888.89 24 26.11

2. Kotak Mahindra Bank

Kotak Bank share price: Rs 1760.5 (as of 16th March 2022)

This bank founded by the legendary banker Uday Kotak is now seen as one of the best banking stocks in the Indian share market.

But in its early days, things weren’t as rosy.

Till around September 2003, the Kotak Bank share price remained under ₹10. Sometimes even going as low as Rs 1.8!

Anyway, 16 years later, this stock is trading above ₹1700. A huge step up. This is one of the best multibagger stock stories of India.

Money invested (₹) Value today (₹) Duration (years) CAGR (%)
1,00,000 1,76,05,000 19 31.28

3. Lupin

Lupin share price: Rs 749.60 (as of 16th March 2022)

This multibagger has come to become a pharmaceutical company of astronomical proportions. Lupin via its acquired companies is present in USA, Mexico and Latin America, Japan, Philipines, Australia, South Africa, and more!

Today, Lupin share trading at over ₹740 makes it hard to believe there was a time when this stock was trading at around ₹2 around 21 years ago!

Lupin has become especially famous because of the legendary investor Rakesh Jhunjhunwala’s investment in this company.

Money invested (₹) Value today (₹) Duration (years) CAGR (%)
1,00,000 3,74,80,000 21 32.61

4. Titan

Titan share: Rs 2587.30 (as of 16th March 2022)

This Tata company which also owns the gold brand Tanishq is also famous for featuring in the portfolio of Rakesh Jhunjhunwala.

Titan stock price today is well over ₹2500. But back in the year 2000, this multibagger stock saw lows as bad as Rs 2.6!

Rakesh Jhunjhunwala is said to have made massive gains investing in the Titan Company.

Money invested (₹) Value today (₹) Duration (years) CAGR (%)
1,00,000 9,95,11,538.4 22 36.86

5. Bajaj Finance (a subsidiary of Bajaj Finserv)

Bajaj Finance share price: Rs 6840.60 (as of 16th March 2022)

It is a subsidiary of Bajaj Finserv. 

This company is an NBFC (Non-Banking Finance Company).

It focuses primarily on two and three wheeler loans.

It is hard to believe that this multibagger stock was a once penny stock and was trading at Rs 2.8 per share in around 2000!

Money invested (₹) Value today (₹) Duration (years) CAGR (%)
1,00,000 24,43,07,142.8 22 42.56

6. JSW Steel

JSW Steel share price: Rs 655.25 (as of 16th March 2022)

India’s 2nd largest private steel company, JSW Steel has a presence in over 140 countries. In fact, it is one of the fastest growing companies in India.

It becomes hard then to digest the fact that this stock around the year 2000 saw share prices as low as Rs 0.50! Yes, 50 paise! 

Money invested (₹) Value today (₹) Duration (years) CAGR (%)
1,00,000 13,10,50,000 22 38.58

 

What are They?

In the Indian stock market, penny stocks have no solid definition. In the US, a penny stock, as the name suggests is any stock that is trading below $1.

But in India, it is loosely accepted that any stock trading below Rs 10 is a penny stock.

How to Invest in penny stocks?

Buying penny stocks in India is done just as you would any other stock.

You need to have a trading account, a demat account, and bank account.

As mentioned before, there is no definition of penny stocks. In the eyes of the exchange, all stocks are just stocks.

However, you must note here, there’s the question of liquidity.

Some penny stocks are barely ever traded. This makes buying or selling them difficult.

Also, many times penny stocks are bought an sold away from the exchange in bulk deals.

Should You Invest in Penny Stocks?

That depends.

Looking only at penny stocks to invest in is almost definitely a very bad idea. Investing in penny stocks is also extremely risky. Low liquidity and lesser historical track record in the stock market makes it difficult to make an informative decision. The idea to get lucrative returns is always good but getting stuck in a soup because the stock was cheap is not advisable.

Do you research on the company’s fundamentals and long term growth prospects.

Happy investing!

Disclaimer: the views expressed here are of the author and do not reflect those of Groww. 

 

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Disclaimer

The stocks mentioned in this article are not recommendations. Please conduct your own research and due diligence before investing. Investment in securities market are subject to market risks, read all the related documents carefully before investing. Please read the Risk Disclosure documents carefully before investing in Equity Shares, Derivatives, Mutual fund, and/or other instruments traded on the Stock Exchanges. As investments are subject to market risks and price fluctuation risk, there is no assurance or guarantee that the investment objectives shall be achieved. NBT do not guarantee any assured returns on any investments. Past performance of securities/instruments is not indicative of their future performance.
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