Smart money or money invested by institutional investors has found a way to a few small-cap stocks. Data shows that both Foreign Institutional Investors (FIIs) and Domestic Institutional Investors (DIIs) have consistently increased their stake in the following small-cap stocks:
Tata Coffee Ltd.
The Tata Group company is engaged in the production, trading and distribution of coffee and tea and allied products. FIIs held a 0.71% stake in the March quarter of 2022 and they hold a 2.69% stake as per the data for the quarter that ended in December 2022. DIIs have also increased their stake in the company from 4.3% to 5.6% during the same period.
Tata Coffee is a small-cap stock with a market capitalization of 2,878 crores. Its shares were trading at ₹ 208 levels on Wednesday. It has a return on equity of 10.23% and an ideal debt-to-equity ratio of 0.67. The company’s shares were trading at a price-to-earnings ratio of 15.22, which is lower than the industry P/E of 18.86, indicating that the stock might be undervalued as compared to its peers.
IIFL Finance
The NBFC is engaged in the business of loans and mortgages along with its subsidiaries. FIIs increased their stake in the company from 20.66 % in the March quarter of 2022 to 27.79 % in the December quarter of 2022. At the same time, DIIs increased their holdings in the company from 1.04 % to 3.91%.
IIFL Finance is a small-cap stock with a market capitalization of ₹ 16,299 crores. Its shares were trading at ₹ 437 levels on Wednesday. It has an ideal return on equity of 20.05%. The company’s shares were trading at a price-to-earnings ratio of 11.8, which is significantly lower than the industry P/E of 23.3, indicating that the stock might be undervalued and its price might increase in the future.
Aegis Logistics Ltd.
The logistics company is in the business of Liquified Petroleum Gas (LPG) and storage and terminalling facility for LPG and chemical products. FIIs increased their stake in the company from 15.03% (March 2022) to 16.4% (December 2022). Similarly, DIIs increased their stake in the company from 2.18% in the March quarter of 2022 to 3.76% in the December quarter of 2022.
Aegis Logistics is a small-cap stock with a market capitalization of 12,778 crores. Its shares were trading at ₹ 366 levels on Wednesday. It has a return on equity of 17.37% and an ideal debt-to-equity ratio of 0.46. The company’s shares were trading at a price-to-earnings ratio of 30.66, which is significantly higher than the industry P/E of 5.63, indicating that investors are willing to pay a higher price for the company’s future earnings.
Tatva Chintan Pharma Chem Ltd.
The company manufactures a diverse portfolio of structure directing agents, phase transfer catalysts, electrolyte salts for batteries, and pharmaceutical and agrochemical intermediates and other speciality chemicals. FIIs increased their stake in the company from 3.05% in the March quarter of 2022 to 3.74% in the December quarter of 2022. DII’s increased their stake from 8.13% to 11.52% during the same period.
Tatva Chintan Pharma Chem is a small cap company with a market capitalization of ₹ 4248 crores. Its shares were trading at ₹ 4248 levels on Wednesday. It has an excellent return on equity of 30.01% and an ideal debt-to-equity ratio of 0.29. The company’s shares were trading at a price-to-earnings ratio of 92.27, which is significantly higher than the industry P/E of 13.01, indicating that its shares might be overvalued as compared to its peers.
Written by Simran Bafna
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