Small-cap stocks are those stocks that have a market capitalization below ₹ 16,800. While they are risky to invest in, as compared to mid-cap and large-cap stocks, some of them turn out to have good metrics and tend to deliver multibagger returns.
Here are a few fundamentally strong small-cap stocks that delivered multibagger returns in the past year:
Godawari Power & Ispat
Godawari Power & Ispat is mainly engaged in the business of mining iron ore and manufacturing iron ore pellets, sponge iron, steel billets, wire rods, H.B. wire and ferroalloys with the generation of electricity.
With a market capitalization of ₹ 8,789 crores, Godawari Power is a small-cap company. It has a high return on equity of 26.12 percent and an ideal debt-to-equity ratio of 0.08. Its shares were trading at a price-to-earnings ratio (P/E) of 12.60, which is lower than the industry P/E of 23.64, indicating that the stock might be undervalued as compared to its peers.
The company’s share price increased from ₹ 290.80 to ₹ 613.90 in the past year, delivering multibagger returns of 111.11 percent.
Gravita India
Gravita India is one of the largest lead producers in India. The company’s business is organised across four specialised verticals: lead recycling (flagship), aluminium recycling, plastic recycling and turnkey projects. The company also has expertise in the recycling of used batteries, cable scrap/ lead scrap, aluminium scrap, plastic scrap, and so on.
With a market capitalization of ₹ 5,409 crores, Gravita India is a small-cap company. It has a high return on equity of 28.12 percent and an ideal debt-to-equity ratio of 0.59. Its shares were trading at a price-to-earnings ratio (P/E) of 25.68, which is higher than the industry P/E of 14.69, indicating that investors might be willing to pay a higher price for its shares.
The company’s share price increased from ₹ 333.15 to ₹ 769.00 in the past year, delivering multibagger returns of 130.83 percent.
Magellanic Cloud
Magellanic Cloud provides its IT services in software development, consulting and human resource business solutions i.e. listing employment vacancies and referring or placing applicants for employment.
With a market capitalization of ₹ 4,649 crores, Magellanic Cloud is a small-cap company. It has a high return on equity of 22.29 percent and an ideal debt-to-equity ratio of 0.60. Its shares were trading at a price-to-earnings ratio (P/E) of 55.87, which is higher than the industry P/E of 27.09, indicating that investors might be willing to pay a higher price for its shares.
The company’s share price increased from ₹ 80.26 to ₹ 401.26 in the past year, delivering multibagger returns of 399.95 percent.
Written by Simran Bafna
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