Small-cap stocks, categorised by a market capitalisation under Rs. 5,000 cr., 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 returnsSimla Investment. However, they also tend to be more volatile and less liquid. Further, we have listed small-cap stocks with huge growth potential, fundamentally strong small cap stocks, and the ones based on their 1-yr return. Whether you’re assessing risk tolerance or seeking long-term growth, understanding the basics of small-cap stocks is essential for informed investment decisions.
Note: The data in this small cap stocks list is from 3rd October 2024. The best small cap stocks for long term are filtered using Tickertape Stock Screener using the following parameters:
Stock Universe: Nifty 500Market Cap: Small-cap5Y Average Net Profit Margin: Set the limit to 5 to High (Sorted from highest to lowest)5Y Historical Revenue Growth: Set the limit to 10 to HighReturn on Equity: Set the limit to 10 to High1Y Forward EPS Growth: Set the limit to 10 to High
🚀 Pro Tip: You can use Tickertape’s Stock Screener to research and evaluate stocks with over 200+ filters and parameters.
Find out how you can easily invest in small-cap stocks through professionally managed portfolios on smallcase. Smallcases can help you identify the best small-cap stocks for 2024, offering diversification and strategic investment in India’s best small cap stocks.
But first, let’s explain what smallcase is all about.
What is a smallcase?
smallcases are modern investment products that help investors build low-cost, long-term & diversified portfolios with ease. A smallcase is a basket or portfolio of stocks/ETFs representing an idea – an objective, theme, or strategy. They are created and managed by SEBI-registered experts.
Among 500+ smallcases, here’s a smallcase that is focused on small cap companies:
Note: These smallcases are mentioned only for educational purposes and are not meant to be recommendatory. Investors must conduct their own research and consult a financial expert before making any investment decisions.
Disclosure for Mi25 SmallcapDisclosure for Wright 🌱 Smallcaps
Indian Energy Exchange Ltd (IEX) was incorporated in 2007 and is India’s first and largest energy exchange, facilitating the trading of electricity, renewable energy certificates, and energy-saving certificates. Investors may view this company as one of the best small-cap stocks due to its role in India’s energy sector.
The company has a market capitalisation of Rs. 18,558.24 cr., and a closing price of Rs. 208.99. Its PE ratio is 52.90. The 5-yr average net profit margin is 61.01%, with a 5-yr historical revenue growth of 13.81%. The return on equity is 39.61%, and the 1-yr forward EPS growth is 14.07%.
Central Depository Services (India) Ltd (CDSL) was established in 1999 as a depository in India, providing services related to the dematerialisation of securities, e-voting, and other investor servicesKolkata Investment. It is one of the key players in India’s financial market infrastructure.
CDSL’s market capitalisation is Rs. 30,025.99 cr., with a closing price of Rs. 1,415.30. The PE ratio is 71.64. The company has a 5-yr average net profit margin of 45.87%, 5-yr historical revenue growth of 29.89%, a return on equity of 30.32%, and a 1-yr forward EPS growth of 26.41%. With a strong financial base, this stock ranks among the most profitable small cap stocks for 2024.
Aptus Value Housing Finance India Ltd was founded in 2009 and operates in the home financing sector, focusing on providing housing loans to the self-employed and informal income segment in India. Its financial fundamentals make it one of the small cap stocks with strong fundamentals and a top 10 small cap stock in India 2024.
The market capitalisation of Aptus Value Housing Finance India Ltd is Rs. 17,590.52 cr., with a closing price of Rs. 340.45. The PE ratio is 28.75. The company’s 5-yr average net profit margin is 42.49%, with historical revenue growth of 33.16%. The return on equity is 17.22%, and the 1-yr forward EPS growth is 22.20%.
Five-Star Business Finance Ltd was founded in 1984 and is engaged in providing secured business loans to micro-entrepreneurs and self-employed individuals, focusing on underserved markets in India.
With a market capitalisation of Rs. 24,181.33 cr., the stock has been identified as one of the fastest growing small cap stocks in India. It has a PE ratio of 28.93. The company’s return on equity is 17.53%, and the 1-yr forward EPS growth is 29.90%, making it one of the best future small cap stocks.
Clean Science and Technology Ltd was incorporated in 2003 and specialises in developing and manufacturing speciality chemicals used in various industries, including pharmaceuticals, agrochemicals, and personal care.
With a market capitalisation of Rs. 17,318.06 cr., the company is considered one of the best small-cap stocks to invest in 2024 due to its strong presence in multiple sectors. The PE ratio of the company is 70.97. Its 5-yr average net profit margin is 32.23%, with historical revenue growth of 15.53%.
Suven Pharmaceuticals Ltd was established in 2018 and operates in the pharmaceuticals sector, focusing on contract development, manufacturing, and active pharmaceutical ingredients (APIs). The company is a key player in providing custom synthesis to global pharmaceutical companies.
Its market capitalisation stands at Rs. 30,615.25 cr., and it has been noted as one of the best 10 small cap stocks for long-term investors. It has a PE ratio of 101.96. The 5-yr average net profit margin is 31.34%, with historical revenue growth of 24.09%. The return on equity is 15.86%, and the 1-yr forward EPS growth is 13.60%.
CE Info Systems Ltd, commonly known as MapmyIndia, was founded in 1995 and is involved in providing digital maps, geospatial software, and location-based services in India. The company caters to a wide range of sectors including automotive, government, and corporate.
The company has a market capitalisation of Rs. 11,966.59 cr. and has consistently been one of the high CAGR small cap stocks to watch in India. The PE ratio is 89.33. Its 5-yr average net profit margin is 29.46%, historical revenue growth is 20.65%, the return on equity is 22.29%, and the 1-yr forward EPS growth is 29.04%.
Computer Age Management Services Ltd (CAMS), established in 1988, is a leading provider of mutual fund transfer agency services. The company’s steady performance makes it one of the best small cap stocks for long-term portfolios in 2024.
CAMS has a market capitalisation of Rs. 22,572.58 cr., with a closing price of Rs. 4,422.40. The company’s PE ratio is 63.83. The company has a 5-yr average net profit margin of 28.26%, historical revenue growth of 10.58%, a return on equity of 41.65%, and a 1-yr forward EPS growth of 29.59%.
Indiamart Intermesh Limited became a public limited company on 13th September 1999. It connects buyers and suppliers across various product categories and regions in India. Serving as an e-marketplace for business needs, this small cap company facilitates interactions between domestic and international buyers and suppliers.Ahmedabad Stock
Indiamart Intermesh Ltd has a market capitalisation of Rs. 17,967.56 cr., with a closing price of Rs. 2,913.10. The company’s PE ratio is 53.80. The company has a 5-yr average net profit margin of 28.06%, historical revenue growth of 20.74%, a return on equity of 17.60%, and a 1-yr forward EPS growth of 29.64%.
Aavas Financiers Ltd. is a Housing Finance Company (HFC) registered with the National Housing Bank (NHB). It focuses on providing long-term housing finance in domestic markets, catering to the growing needs of low and middle-income customers in suburban and rural India.
Aavas Financiers has a market capitalisation of Rs. 14,645.94 cr., making it a prominent player in the best smallcap stocks to invest in 2024 category. The company’s PE ratio is 29.85. The company has a 5-yr average net profit margin of 26.37%, historical revenue growth of 23.23%, a return on equity of 13.93%, and a 1-yr forward EPS growth of 19.28%.Chennai Investment
Note: The information on this small cap share list is dated 3rd October 2024. We have listed the top 10 fundamentally strong small cap stocks from Tickertape Stock Screener based on the following parameters:
Stock Universe: Nifty 500Market Cap: Small-capNet income: Set to Positive – Set the lower limit to zeroReturn on equity: Set to high Debt-to-equity ratio: Set to Low
Note: The information on this list of top small cap stocks is dated 3rd October 2024. We have listed the top 10 small-cap stocks to buy in India from Tickertape Stock Screener based on the following parameters:
Stock Universe: Nifty 500Market Cap: Small-cap1Y Return: Set to high (Sort from highest to lowest)
Technically, small-cap stocks belong to companies that have a market capitalisation under Rs. 5,000 cr. In other words, shares of small-cap companies are called small-cap stocks.
Since these have scope for high growth, small-cap stocks are known to give higher returns compared to mid and large-cap stocks. However, it is also true that in a falling market, these stocks are impacted the most and, thus, become highly volatile.
Small cap companies in India are ranked 251 and above in terms of market capitalisation.They are relatively new businesses compared to mid and small-cap entities.Small cap stocks with strong fundamentals have the potential for high growth, which means the possibility of yielding high returns to their stockholders is also high.They can be great wealth generators when held for the long term. Some small caps can be multibagger stocks if they generate very high returns.These stocks are highly volatile as they are the most impacted in a bear market or downtrend.Small-cap companies may have lower revenue and cash flow compared to others.Prices of some stocks may be undervalued because they may not be as recognised as their counterparts. This is especially true for small value stocks or small cap IT stocks.Small caps with strong fundamentals that do well over time become mid and large-cap stocks.They are the least liquid stocks as they are not well recognised and are traded less often.
The market has benchmark small-cap indices that track the performance of small-cap stocks in the Indian stock market. Investors often look to these indices to identify the best small cap stock to buy or the top 10 small cap stocks in India 2024.
Due to the associated high risk, small-cap stocks are well suited for investors with a high tolerance for risk. However, any stock market investor can include small-cap stocks in their portfolio for diversification purposes. But bear in mind that keeping a long-term investment horizon is necessary.
If you are thinking of investing in small-cap stocks, you need to consider the following factors:
Company’s Management: Irrespective of the company’s size, you may need to look into the top management, such as the CEO, CFO, and other key executives. Check if they have successfully managed businesses before. One tip would be to see if the top management holds shares in the company, as this may indicate that they trust their business and are committed to its success.Company Growth: Analysing a company’s growth involves checking its earnings and cash position. While small-cap companies often have limited cash flow, you should look for good annual revenue and positive operating margins, which may indicate the company’s ability to turn sales into profits. Remember that small-cap companies might operate at a loss initially, so assessing their long-term growth potential is crucial.Financial Ratios: To understand the company’s financial health, You can evaluate key ratios like small cap share price, debt-to-Equity, return on Equity (ROE), and profit Margins. These ratios can provide insights into operational efficiency, which is vital when selecting the best small-cap stocks.Competitive Advantage: Search for the market leader among small cap stocks and check if the company has a clear competitive edge or unique positioning within its industryPune Stock. Small-cap stocks with strong market positioning often show better growth potential.Market Position: Consider how well the company is positioned in its market segment. Companies listed in the Sensex small-cap index or included in a reputed small-cap stocks list often have proven business models.
High Growth Potential: Small-cap stocks often have high growth potential compared to large-cap stocks. Many experts suggest that the best small cap stock for long term can perform.Fairly Priced: As domestic and foreign institutional investors (DIIs and FIIs) often focus on large-cap stocks, small-cap stocks remain fairly priced, allowing retail investors to find value opportunities.Diversification: Investing in small-cap stocks can diversify your portfolio, reducing dependence on large-cap stocks.
Liquidity Issues: Due to lower investor interest, even the best small cap shares can be challenging to buy or sell quickly, which can affect your ability to exit positions when needed.Higher Risk: Even the best small cap stocks to buy are more volatile and susceptible to market changes than large-cap stocks. You can manage this risk through proper diversification and portfolio management.Limited Access to Capital: Small-cap companies often need help accessing capital, which can limit their ability to expand or survive during economic downturns.
Investing in small-cap stocks can offer substantial rewards, but you should carefully analyse the fundamentals and consider both the advantages and risks involved.
Small-cap stocks can provide an investor with an opportunity to earn good returns on their investments. At the time of economic recovery or growth, actively managed small-cap stocks can outperform other stocks in the market. However, it is important to note that small-cap stocks are considered risky compared to mid-cap or large-cap stocks. Hence, evaluate your risk appetite and the sectors that have good potential to perform during uncertain times while choosing small cap stocks to buy today.
Investing in small-cap stocks with huge growth potential can be a rewarding journey. These stocks often represent companies with strong management, innovative business models, and a competitive edge, making them attractive to investors. However, small-cap stocks come with their own set of challenges, such as higher volatility, lower liquidity, and increased sensitivity to market conditions. By carefully analysing key factors like financial health, growth prospects, and market positioning, you can identify the best small-cap stocks that align with your goals. With thorough research and the right strategy, small-cap stocks can add significant value to your investment portfolio over the long term.
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