AI Smallcap Stocks In India: Technology is constantly evolving, from the Industrial Revolution to the current Artificial Intelligence and Machine Learning, which automate many industries. Companies are taking advantage of the opportunity to gain market share, and an increasing number of clients are looking to apply AI to their core business.

Some companies are making changes to enter the space. In this article, we will look into some smallcap stocks that are trying to get into Artificial Intelligence in their line of business.

Best AI Smallcap Stocks In India

AI Smallcap Stocks In India #1: Affle (India)

AI Smallcap Stocks in India - Affle (India)

Anuj Khanna Sohum and Anuj Kumar founded Affle in 2005, and in 2006 they established companies in India and the United Kingdom. It is a technology company that operates globally and develops platforms that can transform ads into recommendations.

Their product platforms include You.APPI, Vizury, Mediasmart, MAAS, RevX, mTraction Enterprise, Jampp, FaaS, and Appnext. Later on, it developed a cross-messaging platform called Pinch in 2010. 

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It enables businesses to identify, engage, and acquire customers, making it an effective revenue-generating tool. It started by launching a mobile media platform that offered browser-type functions over SMS. 

The company has evolved over the years with technology and built multiple platforms to help businesses improve their market presence. It is worth noting that the company reported successfully filing 14 patents in India in November 2023, with an additional 15 patents pending. These patents relate to different areas such as privacy management, enhanced fraud detection, predictive analytics, automated AI agents, and security.

Affle (India) has established a presence and earned 86.63% of its revenue from operations in India, 5.35% from Singapore, and 8% from the rest of the world in FY23.

The company’s revenue from operations grew 29%, from Rs. 1,153 crore in FY22 to Rs. 1,488 crore in FY23. Net profits jumped 14% YoY from Rs. 215 crore in FY22 to Rs. 245 crore in FY23.

ParticularsAmountParticularsAmount
CMP₹1,104.45Market Cap (Cr.)₹16,765.00
Stock P/E (TTM)61.59EPS (TTM)₹19.42
RoE (%)16.59%RoCE (%)16.75%
Promoter Holdings (%)59.89%Public Holdings (%)16.36%
Debt to Equity Ratio0.1Interest Coverage Ratio25.68
Current Ratio (TTM)2.24Net Profit Margin (%)17.12%

AI Smallcap Stocks In India #2: Kellton Tech Solutions

Kellton tech logo

Kellton, a technology company, was founded by Niranjan Chintam in 1994. It serves industries such as construction, food and beverage, oil and gas, distribution, manufacturing, chemicals, real estate, energy and utilities, healthcare, and other industries. It provides services such as digital integration, technology consulting, digital commerce and marketing, and others.

Recent developments include securing a significant 8-year contract from LIC, covering infrastructure and a workforce of approximately 150,000 individuals. Additionally, the company has successfully acquired 11 new clients across various industries in Q3.

Presently, the order book amounts to approximately Rs 800 crores. The company aims to achieve a revenue target of $200 million within the next three years, by FY26. 

In FY23, different segments such as digital transformation account for 81.95%, enterprise solutions account for 14.08%, and consulting accounts for 3.95% of total operational revenue. Kellton’s revenue from operations increased by 8.77% year on year in FY23 to Rs. 917 crore, up from Rs. 843 crore the previous year. Net profits decreased from Rs. 70 crore in FY22 to a loss of Rs. 127 crore in FY23.

The loss was attributed to an exceptional item of Rs. 184 crore that was written off as goodwill in companies based in the United States and Ireland because it had no future economic value for the company.

ParticularsAmountParticularsAmount
CMP₹114.20Market Cap (Cr.)₹933.97
Stock P/E (TTM)17.39EPS (TTM)₹5.56
RoE (%)13.22%RoCE (%)14.74%
Promoter Holdings (%)52.14%Public Holdings (%)47.78%
Debt to Equity Ratio0.33Interest Coverage Ratio7.1
Current Ratio (TTM)8.39Net Profit Margin (%)7.64%

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AI Smallcap Stocks In India #3: Zensar Technologies

AI Smallcap Stocks in India - Zensar Technologies

Zensar Technologies, a company within the RPG Group headed by Harsh Goenka and based in Pune, boasts a workforce exceeding 10,500 individuals. Serving a diverse clientele, the company caters to more than 145 global clients. They offer services such as engineering experience, advanced engineering, data engineering and analytics, application services, and foundation services.

According to the recent transcript, the order book remains healthy at $167.5 million. Healthcare was created as a new vertical, which can drive growth. Evaluating M&A along with investments.

With approximately 37 offices spanning the globe, the company’s revenue segmentation in FY23 reflects dominance in the Americas, contributing 70.69% of its total revenue. Following closely, Europe accounted for 17.98%, while the rest of the world constituted 11.33%.

Unlike the other companies on our list, Zensar specialises in three industries. Banking, Financial Services and Insurance, Hi-Tech and Manufacturing, and Consumer Services. 

The Advanced Engineering division of the company has developed the AI Engineering Buddy in collaboration with Microsoft. This system leverages the capabilities of GPT models within the Azure OpenAI ecosystem, providing top-notch solutions that enhance user efficiency by a minimum of 30%.

Zensar’s revenue from operations in FY23 was Rs. 4,848.20 crore, up 14.24% from Rs. 4,243.80 crore the previous year. Net profits dropped by 22.31%, from Rs. 421.70 crore in FY22 to Rs. 327.60 crore in FY23.

The decline in net profits can be attributed to a rise in employee costs, which grew by 3.73% year-on-year compared to revenue. As a result, operating margins decreased by approximately 4% in FY23 compared to the previous year.

ParticularsAmountParticularsAmount
CMP₹544.25Market Cap (Cr.)₹12,717.00
Stock P/E (TTM)24.19EPS (TTM)₹23.21
RoE (%)16.17%RoCE (%)20.26%
Promoter Holdings (%)49.20%Public Holdings (%)17.94%
Debt to Equity Ratio0.11Interest Coverage Ratio16.92
Current Ratio (TTM)3.24Net Profit Margin (%)6.76%

AI Smallcap Stocks In India #4: RateGain Travel Technologies

RateGain Travel Technologies logo

Rate Gain Technologies is a provider of Software as a Service (SaaS) Company serving the hospitality and travel sector with Rate Gain’s AI-powered Solutions. Bhanu Chopra founded it in 2004.

The company serves over 2,443 hotel brands, 144 Online Travel Agents (OTA), and 355 travel brands. Their AI model taps into a data pool of over 370 billion data points sourced from a wide network of 700+ partners, including hotel chains, online travel agents, airlines, and car rentals.

In 2020, the company introduced an AI-powered mapping capability, enabling a remarkable 80% increase in channel mapping speed. In 2021, the company introduced a pricing recommendation platform that utilised a combination of data points such as airline capacity, Covid cases, vaccination rates, hotel prices, and OTA searches.

This platform perfectly matched demand with supply, achieving a balance between demand and supply. As per the latest transcript, Q3 witnessed a record-breaking Rs 84.4 crore in new contract wins, marking a 71% increase year-over-year. Presently, the pipeline amounts to Rs 421 crore.

The company’s objective is to double revenues to Rs 2,000 crores within the next three years, from organic and inorganic CAGR of approximately 20-25%. Additionally, pursuing inorganic growth via mergers and acquisitions will supplement this expansion strategy.

The company generates 42.5% of its revenue from hybrid-based products, 25% from transaction-based products, and 32.5% from subscription-based products. In FY23, revenue from operations was derived as follows: 56.05% from North America, 30.05% from Europe, 11% from Asia Pacific, and the remaining 2.9% from the Rest of the World.

In FY23, RateGain reported revenue from operations of Rs. 585.06 crore, up 54.15% from Rs. 366.59 crore in FY22. The company’s net profits increased from Rs 8.41 crore in FY22 to Rs 68.40 crore in FY23. The increase in net profits was due to a reduction in employee expenses as a percentage of revenue, which resulted in improved operating margins.

ParticularsAmountParticularsAmount
CMP₹822.60Market Cap (Cr.)₹9,908.66
Stock P/E (TTM)97.15EPS (TTM)₹8.66
RoE (%)13.23%RoCE (%)13.90%
Promoter Holdings (%)55.72%Public Holdings (%)22.12%
Debt to Equity Ratio0.03Interest Coverage Ratio20.33
Current Ratio (TTM)2.83Net Profit Margin (%)12.10%

AI Smallcap Stocks In India #5: Happiest Minds Technologies

AI Smallcap Stocks in India - Happiest Minds Technologies

Happiest Minds Technologies was founded in 2011 by Ashok Soota. The company leverages a spectrum of disruptive technologies like artificial intelligence, cloud, digital process automation, internet of things, robotics/drones, security, virtual/augmented reality, and more, enabling users in industry sectors like financial services, banking, blockchain, automotive, insurance, e-commerce, engineering research, edutech and development (R&D), and travel/transportation/hospitality and others to undergo digital transformation.

According to a recent transcript, the company is making progress with its three-part strategy to strengthen its sales engine. This includes the creation of a separate Generative AI Business Unit, the recruitment of a global sales head with a focus on acquiring new clients, and the adoption of a verticalized go-to-market approach. 

Happiest Minds continues to see significant potential in the healthcare sector, particularly in areas such as bioinformatics, medical devices, healthcare providers, and life sciences. Within these domains, the company has cultivated expertise in digital technologies, including AI, analytics, and cloud solutions.

In FY23, HM reported revenue from operations of 22.09% from Infrastructure Management & Security Services, 30.07% from Digital Business Services, and 47.83% from Product Engineering Services. The majority of the company’s exposure came from the United States (68.04%), India (16.07%), Europe (9.66%), and others (6.21%) in FY23.

In FY23, the company reported a 30.69% increase in operating revenue to Rs. 1,429.29 crore compared to Rs. 1,093.65 crore. Net profits stood at Rs. 230.99 crore as compared to Rs. 181.20 crore in FY22, an increase of 27.47%. The margin improvement in FY23 was due to a slight reduction in employee costs relative to revenue.

ParticularsAmountParticularsAmount
CMP₹849.05Market Cap (Cr.)₹14,097.00
Stock P/E (TTM)59.65EPS (TTM)₹15.52
RoE (%)16.64%RoCE (%)17.91%
Promoter Holdings (%)51.35%Public Holdings (%)41.09%
Debt to Equity Ratio0.52Interest Coverage Ratio15.17
Current Ratio (TTM)7.28Net Profit Margin (%)15.93%

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Conclusion

As we near the end of the article AI Smallcap Stocks In India, Artificial Intelligence and Machine Learning will revolutionise various industries and challenge the status of traditional methods of working. Change is unavoidable, even for businesses, and those who are proactive and adaptable will eventually win the majority of opportunities. What do you think about the company’s potential? Let us get to know your views in the comments section below.

Written by Santhosh

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