Small-cap stocks, categorized by a market capitalization under Rs. 5,000 crore, present unique opportunities and challenges for investors. These stocks, ranking 251 and above in the market, are often associated with higher growth potential and the possibility of significant returns. However, they also tend to be more volatile and less liquid. In this comprehensive guide, we explore the Top Small Cap Stocks in India for July 2024, providing detailed insights and data to help you make informed investment decisions.
Table of Contents
- Introduction to Small Cap Stocks
- Best Small Cap Stocks for Long Term
- Overview of the Best Small Cap Stocks for 2024
- Fundamentally Strong Small-Cap Stocks
- Top 10 Small-Cap Stocks Based on 1-Year Return
- Features of Small-Cap Stocks
- What is the Small-Cap Stock Index?
- Who Should Invest in Small-Cap Stocks?
- Factors to Consider While Analyzing Small-Cap Stocks
- Advantages and Disadvantages of Small-Cap Stocks
- FAQs on Small-Cap Stocks
Introduction to Small Cap Stocks
Small-cap stocks belong to companies with a market capitalization of less than Rs. 5,000 crore. These stocks are known for their potential for high growth, making them attractive to investors seeking substantial returns. However, their high volatility and lower liquidity pose significant risks, making it essential to conduct thorough research before investing.
Best Small Cap Stocks for Long Term
| Name | Sub-Sector | Market Cap (Rs. in cr.) | Close Price (Rs.) | PE Ratio | 5Y Avg Net Profit Margin (%) | 5Y Historical Revenue Growth (%) | Return on Equity (%) | 1Y Forward EPS Growth (%) |
|---|---|---|---|---|---|---|---|---|
| Indian Energy Exchange Ltd | Power Trading & Consultancy | 14,169.84 | 159.35 | 46.32 | 59.74 | 13.74 | 40.72 | 15.59 |
| Central Depository Services (India) Ltd | Stock Exchanges & Ratings | 22,477.95 | 2,151.00 | 81.46 | 45.88 | 22.44 | 23.06 | 41.63 |
| Aptus Value Housing Finance India Ltd | Home Financing | 17,282.73 | 346.40 | 34.36 | 40.49 | 40.85 | 16.08 | 20.65 |
| Five-Star Business Finance Ltd | Consumer Finance | 20,461.21 | 699.65 | 33.90 | 36.23 | 50.65 | 14.99 | 36.14 |
| Multi Commodity Exchange of India Ltd | Stock Exchanges & Ratings | 21,179.90 | 4,160.85 | 254.84 | 32.45 | 13.72 | 10.28 | 447.30 |
| Easy Trip Planners Ltd | Tour & Travel Services | 8,222.27 | 46.40 | 61.26 | 29.17 | 27.73 | 44.28 | 55.42 |
| CE Info Systems Ltd | Software Services | 10,758.43 | 1,989.65 | 100.31 | 27.16 | 14.39 | 21.71 | 29.83 |
| Aavas Financiers Ltd | Home Financing | 12,705.09 | 1,605.40 | 25.89 | 26.37 | 23.23 | 14.14 | 10.18 |
| Indiamart Intermesh Ltd | Online Services | 15,936.23 | 2,658.30 | 56.15 | 24.04 | 22.11 | 14.43 | 127.01 |
| Caplin Point Laboratories Ltd | Pharmaceuticals | 10,306.43 | 1,357.15 | 27.39 | 24.03 | 22.48 | 22.02 | 20.54 |
Note: Data as of 25th April 2024
Overview of the Best Small Cap Stocks for 2024
Indian Energy Exchange Ltd
Indian Energy Exchange Ltd operates India’s premier power trading platform, offering a transparent and efficient marketplace for trading electricity and renewable energy certificates. As of April 25, 2024, the company has a market capitalization of Rs. 14,169.83 crore, a stock price of Rs. 159.35, a Return on Equity (ROE) of 40.71%, and a 5-year average net profit margin of 59.73%.
Central Depository Services (India) Ltd
Central Depository Services manages securities and facilitates transactions by providing depository services. As of April 25, 2024, the company has a market capitalization of Rs. 22,477.95 crore, a stock price of Rs. 2,151, an ROE of 23.05%, and a 5-year average net profit margin of 45.88%.
Aptus Value Housing Finance India Ltd
Aptus Value Housing Finance specializes in providing affordable home loans to middle-income customers in India’s rural and semi-urban areas. As of April 25, 2024, the company has a market capitalization of Rs. 17,282.72 crore, a stock price of Rs. 346.4, an ROE of 16.08%, and a 5-year average net profit margin of 40.49%.
Five-Star Business Finance Ltd
Five-Star Business Finance offers secured loans to small business owners and self-employed individuals in India, focusing on underserved markets. As of April 25, 2024, the company has a market capitalization of Rs. 20,461.20 crore, a stock price of Rs. 699.65, an ROE of 14.99%, and a 5-year average net profit margin of 36.23%.
Multi Commodity Exchange of India Ltd
Multi Commodity Exchange of India is a leading commodity derivatives exchange, enabling trading in various commodity futures. As of April 25, 2024, the company has a market capitalization of Rs. 21,179.89 crore, a stock price of Rs. 4,160.85, an ROE of 10.28%, and a 5-year average net profit margin of 32.44%.
Easy Trip Planners Ltd
Easy Trip Planners operates as an online travel agency, offering flight bookings, hotel reservations, and holiday packages. As of April 25, 2024, the company has a market capitalization of Rs. 8,222.26 crore, a stock price of Rs. 46.4, an ROE of 44.27%, and a 5-year average net profit margin of 29.17%.
CE Info Systems Ltd
CE Info Systems, known for its brand MapmyIndia, provides advanced digital maps, geospatial software, and location-based IoT technologies. As of April 25, 2024, the company has a market capitalization of Rs. 10,758.43 crore, a stock price of Rs. 1,989.65, an ROE of 21.70%, and a 5-year average net profit margin of 27.15%.
Aavas Financiers Ltd
Aavas Financiers Ltd offers housing loans and other mortgage-related products to low and middle-income households in semi-urban and rural areas. As of April 25, 2024, the company has a market capitalization of Rs. 12,705.08 crore, a stock price of Rs. 1,605.4, an ROE of 14.14%, and a 5-year average net profit margin of 26.37%.
Indiamart Intermesh Ltd
Indiamart Intermesh Ltd is India’s largest online B2B marketplace, connecting buyers with suppliers and facilitating business transactions. As of April 25, 2024, the company has a market capitalization of Rs. 15,936.22 crore, a stock price of Rs. 2,658.3, an ROE of 14.43%, and a 5-year average net profit margin of 24.04%.
Caplin Point Laboratories Ltd
Caplin Point Laboratories develops, manufactures, and markets a wide range of generic medicines, primarily targeting emerging markets in Latin America and Africa. As of April 25, 2024, the company has a market capitalization of Rs. 10,306.43 crore, a stock price of Rs. 1,357.15, an ROE of 22.02%, and a 5-year average net profit margin of 24.03%.
Fundamentally Strong Small-Cap Stocks
| Name | Sub-Sector | Market Cap (Rs. in cr.) | Close Price (Rs.) | PE Ratio | Net Income (Rs. in cr.) | Return on Equity (%) | Debt to Equity (%) |
|---|---|---|---|---|---|---|---|
| MMTC Ltd | Commodities Trading | 11,205.00 | 74.70 | 7.17 | 55.71 | 247.26 | 14.35 |
| Sanofi India Ltd | Pharmaceuticals | 18,777.79 | 8,153.40 | 31.13 | 137.70 | 52.65 | 1.87 |
| Fine Organic Industries Ltd | Specialty Chemicals | 13,983.40 | 4,560.80 | 22.62 | 94.20 | 49.44 | 1.85 |
| Archean Chemical Industries Ltd | Commodity Chemicals | 8,383.59 | 679.40 | 21.91 | 101.53 | 45.18 | 4.85 |
| Castrol India Ltd | Commodity Chemicals | 20,905.10 | 211.35 | 24.19 | 241.94 | 43.12 | 3.63 |
| IDFC Ltd | Diversified Financials | 19,895.81 | 124.35 | 4.69 | 210.04 | 41.36 | 0.00 |
| Indian Energy Exchange Ltd | Power Trading & Consultancy | 14,169.84 | 159.35 | 46.32 | 91.80 | 40.72 | 1.76 |
| Anand Rathi Wealth Ltd | Asset Management | 16,520.92 | 3,949.70 | 73.44 | 56.61 | 40.24 | 7.65 |
| Computer Age Management Services Ltd | Diversified Financials | 15,988.22 | 3,253.40 | 56.05 | 89.29 | 39.89 | 11.92 |
| Gillette India Ltd | FMCG – Personal Products | 20,226.13 | 6,207.15 | 56.87 | 103.95 | 38.45 | 0.01 |
Note: Data as of 25th April 2024
Top 10 Small-Cap Stocks Based on 1-Year Return
| Name | Sub-Sector | Market Cap (Rs. in cr.) | Close Price (Rs.) | PE Ratio | 1-Year Return (%) |
|---|---|---|---|---|---|
| Jai Balaji Industries Ltd | Iron & Steel | 18,785.87 | 1,089.35 | 21.36 | 1,953.44 |
| Inox Wind Ltd | Heavy Electrical Equipments | 21,039.98 | 645.50 | -31.55 | 512.72 |
| Anand Rathi Wealth Ltd | Asset Management | 16,520.92 | 3,949.70 | 73.44 | 362.44 |
| HBL Power Systems Ltd | Batteries | 13,657.39 | 492.70 | 138.44 | 340.30 |
| Schneider Electric Infrastructure Ltd | Heavy Electrical Equipments | 17,901.72 | 748.70 | 144.79 | 327.46 |
| Chennai Petroleum Corporation Ltd | Oil & Gas – Refining & Marketing | 16,025.84 | 1,076.20 | 5.84 | 315.12 |
| Sobha Ltd | Real Estate | 16,623.16 | 1,752.65 | 159.53 | 283.05 |
| Jupiter Wagons Ltd | Rail | 17,297.78 | 419.55 | 143.22 | 282.28 |
| Action Construction Equipment Ltd | Heavy Machinery | 18,492.28 | 1,553.85 | 107.76 | 262.46 |
| Himadri Speciality Chemical Ltd | Commodity Chemicals | 18,107.78 | 367.60 | 44.08 | 261.63 |
Note: Data as of 25th April 2024
Features of Small-Cap Stocks
- Market Capitalization: Small-cap companies are ranked 251 and above in terms of market capitalization.
- Growth Potential: These companies have the potential for high growth, which can yield high returns for stockholders.
- Volatility: Small-cap stocks are highly volatile and can be significantly impacted by market downturns.
- Liquidity: These stocks are less liquid compared to mid and large-cap stocks, as they are traded less frequently.
What is the Small-Cap Stock Index?
The small-cap stock index tracks the performance of small-cap stocks in the Indian stock market, providing a benchmark for evaluating the performance of these stocks.
Who Should Invest in Small-Cap Stocks?
Small-cap stocks are best suited for investors with a high tolerance for risk. They can also be included in a diversified portfolio for long-term growth. Investors should be prepared for significant volatility and potential liquidity challenges.
Factors to Consider While Analyzing Small-Cap Stocks
Company’s Management
Evaluate the experience and track record of the company’s top management. Check if they have successfully run businesses before and if they hold shares in the company.
Company Growth
Assess the company’s revenue and profitability. Look for companies with good annual revenue and positive operating margins, even if they are not yet profitable.
Advantages and Disadvantages of Small-Cap Stocks
Advantages
- High Growth Potential: Small-cap stocks can offer substantial returns over the long term.
- Fair Pricing: These stocks are often fairly priced due to limited institutional investor interest.
Disadvantages
- Liquidity Issues: Small-cap stocks can be challenging to sell due to lower trading volumes.
- Higher Risk: These stocks are more susceptible to market downturns and can be highly volatile.
FAQs on Small-Cap Stocks
What is a small-cap stock?
Small-cap stocks are shares of companies with a market capitalization of less than Rs. 5,000 crore. They rank 251 and above in the stock market.
How to find small-cap stocks?
You can use platforms like Tickertape to filter small-cap stocks based on various parameters such as market cap, net profit margin, and revenue growth.
What are the risks of investing in small-cap stocks?
Small-cap stocks are highly volatile and can be significantly impacted by market downturns. They also lack the financial stability and managerial expertise of larger companies.
What are the benefits of investing in small-cap stocks?
Despite their risks, small-cap stocks have the potential to yield high returns, making them suitable for aggressive investors with a long-term investment horizon.
How to get a list of small-cap stocks in NSE?
Use Tickertape’s Stock Screener to filter small-cap stocks based on market cap, sector, and other parameters.
What are the top small-cap stocks to buy in India?
Based on 1-year return, the top small-cap stocks to buy in India include Jai Balaji Industries Ltd, Inox Wind Ltd, and Anand Rathi Wealth Ltd.
Investing in small-cap stocks can be a rewarding strategy for those willing to take on higher risks for the potential of substantial returns. By carefully selecting stocks with strong fundamentals and growth potential, investors can build a diversified portfolio that leverages the opportunities presented by this dynamic segment of the market.
