Fastest Growing Smallcap Stocks: The Indian stock market is a vast treasure trove of opportunities, with small-cap stocks considered the most exciting and promising options for investors. Although often overlooked by mainstream investors, these stocks are full of untapped potential in the financial world. They are typically shares of companies with small market capitalizations, valued at less than Rs 50 billion in India.
These companies are often in their early growth stages and represent emerging businesses, creating significant opportunities for investors who are ready to take risks. Although they carry high volatility, small-cap stocks also bring the potential for exponential returns, making them particularly attractive for long-term investors. In this article, we will delve deeper into the world of the fastest-growing small-cap stocks in India.
Fastest Growing Smallcap Stocks
Small-cap stocks are one of the most exciting and promising investment opportunities in the Indian stock market. These stocks are generally shares of companies with low market capitalization, which are in their early growth stages and offer significant upside opportunities. Although they carry high volatility, with proper research and a long-term perspective, investors can earn exceptional returns from these stocks. The promising growth trajectory and potential for high returns make small-cap stocks attractive to savvy investors.
1. Nidhi Granites
Nidhi Granites is a diversified business entity, which is involved in the manufacturing and sale of granite and marble slabs, tiles, sandstone and limestone products. The company is also active in the business of paper and paperboard, garments and construction materials. It also conducts financial activities through share trading and investments in shares and mutual funds.
The company has a market capitalization of approximately ₹108 crore, and the current share price is ₹135. In the past one year, the stock has traded at a high of ₹253 and a low of ₹74. The stock has a P/E ratio of 45.2, which is higher than the industry average, and a book value of ₹18.5. Although the company does not pay dividends, its ROCE (Return on Capital Employed) is 9.44% and ROE (Return on Equity) is 6.19%.
As of 2024, Nidhi Granites had annual sales of ₹43.4 crore and a net profit of ₹2.39 crore. The company has an EPS (Earnings Per Share) of ₹2.99, and a suggested price target of ₹10.0. The founders and promoters own 66.8% of the company’s shareholding. Overall, while Nidhi Granites operates with a diversified portfolio, the high P/E ratio and absence of dividends may pose some challenges for investors.
2. Pentokey Organy (India)
Pentoki Organics is a specialist company engaged in the production and trading of organic chemicals. The company is skilled in the production of a wide range of chemicals such as acetic acid, ethyl acetate, acetaldehyde and butyl acetate. These chemicals are used in various industries such as pharmaceuticals, textiles, paints and coatings, where they act as key ingredients in industrial applications.
The company has a market capitalization of ₹26.0 crore, and a current share price of ₹41.5. In the past one year, the stock has traded at a high of ₹82.5 and a low of ₹37.0. The stock has a P/E ratio of 104, which is significantly higher than the industry average, and a book value of ₹15.0. The company does not pay a dividend, but its ROCE (Return on Capital Employed) is 10.1% and ROE (Return on Equity) is 9.86%.
As of 2024, Pentoki Organics had annual sales of ₹0.22 crore and net profit of ₹0.25 crore. The company has an EPS (Earnings Per Share) of ₹0.40, and a suggested price of ₹10.0. The founders and promoters own 73.0% of the company’s shareholding. Overall, although Pentoki Organics operates as a specialty chemicals manufacturing company, its high P/E ratio and relatively low sales and profits may pose some challenges for investors.
3. Ola Electric Mobility
Ola Electric Mobility is a pioneer in the electric vehicle (EV) industry in India, established as a subsidiary of Ola Cabs. It is headquartered in Bengaluru, Karnataka. The company has built a strong position in the Indian EV market by launching innovative products such as electric scooters, particularly the Ola S1 series, and investing in charging infrastructure. Growing environmental awareness and demand for sustainable transportation have fueled the company’s growth.
Ola Electric has a market capitalization of ₹32,790 crore, and a current share price of ₹74.3. The stock has traded at a high of ₹158 and a low of ₹64.6 in the past one year. The company is in a negative position in terms of profitability, with a ROCE (Return on Capital Employed) of -32.1% and EPS (Earnings Per Share) of ₹-8.10. The book value is ₹14.9, and the company does not pay a dividend.
As of 2024, Ola Electric had annual sales of ₹5,010 crore, but a net profit of ₹-1,584 crore. The promoters own 36.8% of the company’s shareholding. While the company has shown impressive results in revenue growth (CAGR 1,696.5% in the last 3 years), it still faces challenges in terms of profitability. Ola Electric continues to invest in its manufacturing capacity and technology through fundraising and strategic partnerships, which is helping it establish itself as a leading player in the Indian EV market.
4. Andhra Cements
Andhra Cements is a well-established cement manufacturing company based in Andhra Pradesh, India. It operates two major manufacturing units: Durga Cement Works (DCW) in Dachepalli and Visakha Cement Works (VCW) in Visakhapatnam. Although the company has a long history in the cement industry, it has faced financial challenges in recent times.
Andhra Cements has a market capitalization of ₹657 crore, and a current share price of ₹71.4. The stock has traded at a high of ₹127 and a low of ₹68.4 in the past one year. The company is in a negative position in terms of profitability, with a ROCE (Return on Capital Employed) of -6.33% and a ROE (Return on Equity) of -27.0%. EPS (Earnings Per Share) of ₹-13.1, and a book value of ₹25.9. The company does not pay a dividend.
As of 2024, Andhra Cements had annual sales of ₹276 crore, but a net profit of ₹-121 crore. The promoters own 90.0% of the company’s shareholding. Although the company is well-established in cement production, its negative financial performance and high promoter holding may pose some challenges for investors. Its success in the future will depend on the company’s improvement in its financial position and restoration of profitability.
5. Fonebox Retail
Phonebox Retail, based in Ahmedabad, Gujarat, is a prominent multi-brand retail chain that specializes in consumer electronics products. The company offers a wide range of products including smartphones, smartwatches, televisions, air conditioners, laptops and various accessories. With over 150 stores across Gujarat, Phonebox Retail has ensured wide visibility and accessibility to its customers. This extensive network of owned and franchised outlets has helped the company reach a diverse customer base.
Phonebox Retail has a market capitalization of ₹110 crore, and a current share price of ₹107. In the past one year, the share has traded at a high of ₹217 and a low of ₹100. The stock has a P/E ratio of 30.5, and a book value of ₹30.9. The company does not pay a dividend, but its ROCE (Return on Capital Employed) is 41.2% and ROE (Return on Equity) is 21.3%.
As of 2023, Phonebox Retail has annual sales of ₹322 crore, and a net profit of ₹3.60 crore. The company’s EPS (Earnings Per Share) is ₹3.51, and the promoters own 71.6% of the shareholding. Phonebox Retail’s impressive growth is the result of a combination of strategic expansion and market dynamics. The company’s strong financial indicators and extensive retail network have established it as a strong player in the consumer electronics sector.
Conclusion
Historically, small-cap stocks have performed exceptionally well, especially during bull markets, when they often outperform larger-cap stocks. However, they are relatively more affected during market corrections, highlighting the importance of careful stock selection and a long-term perspective. In India, small-cap stocks offer a unique mix of risk and reward, making them an exciting yet challenging investment option.
These stocks have the potential to deliver exponential growth, often outperforming their larger counterparts over time. However, due to their high volatility and risk, a cautious, research-driven approach and a willingness to tolerate volatility are required. For investors with a long-term view and a high risk-taking capacity, small-cap stocks can be a powerful tool for wealth creation. With proper analysis and patience, these stocks can deliver significant returns to an investment portfolio.