Investing in penny stocks can be a risky affair. They are extremely volatile and have low liquidity. Moreover, there is very little information available about them. This makes it difficult to analyse them.
However, fundamentally strong penny stocks have the potential to give multibagger returns. In fact, there are several large-cap stocks that were penny stocks once.
You can start you're search with Equitymaster's stock screener to find the best multibagger penny stocks.
Specifically, look for companies with strong balance sheet, high promoter holding, high quality of the business, strong cash flows and cheap valuations.