Last Updated on May 17, 2024 by Anjali Chourasiya
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 returns. However, they also tend to be more volatile and less liquid. In this concise guide, we explore the features, advantages, and disadvantages of small-cap stocks, offering practical insights for investors looking to navigate this segment of the market. 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.
Table of Contents
Best Small Cap Stocks for Long Term
| Name | Sub-Sector | Market Cap (Rs. in cr.) | Close Price (Rs.) | PE Ratio | 5Y Avg Net Profit Margin (%) | 5Y Historical Revenue Growth (%) | Return on Equity (%) | 1Y Forward EPS Growth (%) |
| Indian Energy Exchange Ltd | Power Trading & Consultancy | 14,169.84 | 159.35 | 46.32 | 59.74 | 13.74 | 40.72 | 15.59 |
| Central Depository Services (India) Ltd | Stock Exchanges & Ratings | 22,477.95 | 2,151.00 | 81.46 | 45.88 | 22.44 | 23.06 | 41.63 |
| Aptus Value Housing Finance India Ltd | Home Financing | 17,282.73 | 346.40 | 34.36 | 40.49 | 40.85 | 16.08 | 20.65 |
| Five-Star Business Finance Ltd | Consumer Finance | 20,461.21 | 699.65 | 33.90 | 36.23 | 50.65 | 14.99 | 36.14 |
| Multi Commodity Exchange of India Ltd | Stock Exchanges & Ratings | 21,179.90 | 4,160.85 | 254.84 | 32.45 | 13.72 | 10.28 | 447.30 |
| Easy Trip Planners Ltd | Tour & Travel Services | 8,222.27 | 46.40 | 61.26 | 29.17 | 27.73 | 44.28 | 55.42 |
| CE Info Systems Ltd | Software Services | 10,758.43 | 1,989.65 | 100.31 | 27.16 | 14.39 | 21.71 | 29.83 |
| Aavas Financiers Ltd | Home Financing | 12,705.09 | 1,605.40 | 25.89 | 26.37 | 23.23 | 14.14 | 10.18 |
| Indiamart Intermesh Ltd | Online Services | 15,936.23 | 2,658.30 | 56.15 | 24.04 | 22.11 | 14.43 | 127.01 |
| Caplin Point Laboratories Ltd | Pharmaceuticals | 10,306.43 | 1,357.15 | 27.39 | 24.03 | 22.48 | 22.02 | 20.54 |
Note: The data in the above table is from 25th April 2024. The best small cap stocks for long term are filtered using Tickertape Stock Screener using the following parameters:
- Stock Universe: Nifty 500
- Market Cap: Small-cap
- 5Y 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 High
- Return on Equity: Set the limit to 10 to High
- 1Y 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.
How to Invest in SmallCap Stocks with smallcase?
Find out how you can easily invest in smallcap stocks through professionally managed portfolios on smallcase.
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 Smallcap
Disclosure for Wright 🌱 Smallcaps
Overview of the Best Small Cap Stocks For 2024
Indian Energy Exchange Ltd
Indian Energy Exchange Ltd operates India’s premier power trading platform, providing a transparent and efficient platform for trading electricity and renewable energy certificates, facilitating balanced and economic pricing.
The company, as of 25th April 2024, had a market capitalisation of Rs. 14,169.83 cr. and a stock price of Rs. 159.35. Indian Energy Exchange Ltds Return on Equity (ROE) is 40.71%, and the 5Y average net profit margin is 59.73%. The 1Y Forward EPS Growth is 15.59%.
Central Depository Services (India) Ltd
Central Depository Services manages securities and facilitates their transaction by providing depository services, ensuring secure and efficient trade execution within the Indian financial market.
The company, as of 25th April 2024, had a market capitalisation of Rs. 22,477.95 cr. and a stock price of Rs. 2,151. Central Depository Services (India) Ltds Return on Equity (ROE) is 23.05%, and the 5Y average net profit margin is 45.88%. The 1Y Forward EPS Growth is 41.63%.
Aptus Value Housing Finance India Ltd
Aptus Value Housing Finance specializes in providing affordable home loans to middle-income customers in India’s rural and semi-urban areas, enhancing access to housing finance. As of 25th April 2024, the company’s market capitalisation is Rs. 17,282.72 cr. and a stock price of Rs. 346.4. Aptus Value Housing Finance India Ltds Return on Equity (ROE) is 16.08%, and the 5Y average net profit margin is 40.49%. The 1Y Forward EPS Growth is 20.65%.
Five-Star Business Finance Ltd
Five-Star Business Finance offers secured loans to small business owners and self-employed individuals in India, focusing on underserved markets with a commitment to responsible lending. As of 25th April 2024, the company’s market capitalisation is Rs. 20,461.20 cr. and a stock price of Rs. 699.65. Five-Star Business Finance Ltds Return on Equity (ROE) is 14.99%, and the 5Y average net profit margin is 36.23%. The 1Y Forward EPS Growth is 36.14%.
Multi Commodity Exchange of India Ltd
Multi Commodity Exchange of India is a leading commodity derivatives exchange in India that enables trading in various commodity futures, promoting market stability and price discovery. The company, as of 25th April 2024, had a market capitalisation of Rs. 21,179.89 cr. and a stock price of Rs. 4,160.85. Multi Commodity Exchange of India Ltds Return on Equity (ROE) is 10.28%, and the 5Y average net profit margin is 32.44%. The 1Y Forward EPS Growth is 447.29%.
Easy Trip Planners Ltd
Easy Trip Planners operates as an online travel agency in India, providing a comprehensive range of travel-related services, including flight bookings, hotel reservations, and holiday packages, focusing on customer satisfaction and affordable travel. The company, as of 25th April 2024, had a market capitalisation of Rs. 8,222.26 cr. and a stock price of Rs. 46.4. Easy Trip Planners Ltds Return on Equity (ROE) is 44.27%, and the 5Y average net profit margin is 29.17%. The 1Y Forward EPS Growth is 55.41%.
CE Info Systems Ltd
CE Info Systems, known for its brand MapmyIndia, provides advanced digital maps, geospatial software, and location-based IoT technologies, driving innovation in navigation and location-based services in India. On 25th April 2024, the company’s market capitalisation was Rs. 10,758.43 cr. and a stock price of Rs. 1,989.65. CE Info Systems Ltds Return on Equity (ROE) is 21.70%, and the 5Y average net profit margin is 27.15%. The 1Y Forward EPS Growth is 29.82%.
Aavas Financiers Ltd
Aavas Financiers Ltd offers housing loans and other mortgage-related products to low and middle-income households in semi-urban and rural areas of India, prioritizing customer service and sustainable development. On 25th April 2024, the company’s market capitalisation was Rs. 12,705.08cr. and a stock price of Rs. 1,605.4. Aavas Financiers Ltds Return on Equity (ROE) is 14.14%, and the 5Y average net profit margin is 26.37%. The 1Y Forward EPS Growth is 10.17%.
Indiamart Intermesh Ltd
Indiamart Intermesh Ltd is India’s largest online B2B marketplace, connecting buyers with suppliers and facilitating business transactions across varied industries, enhancing the ease of doing business. The company, as of 25th April 2024, had a market capitalisation of Rs. 15,936.22 cr. and a stock price of Rs. 2,658.3. Indiamart Intermesh Ltds Return on Equity (ROE) is 14.43%, and the 5Y average net profit margin is 24.04%. The 1Y Forward EPS Growth is 127.01%.
Caplin Point Laboratories Ltd
Caplin Point Laboratories develops, manufactures, and markets a wide range of generic medicines, primarily targeting emerging markets in Latin America and Africa, with a focus on affordability and quality. The company, as of 25th April 2024, had a market capitalisation of Rs. 10,306.43 cr. and a stock price of Rs. 1,357.15. Caplin Point Laboratories Ltds Return on Equity (ROE) is 22.02%, and the 5Y average net profit margin is 24.03%. The 1Y Forward EPS Growth is 20.54%.
Fundamentally Strong Smallcap Stocks
| Name | Sub-Sector | Market Cap (Rs. in cr.) | Close Price (Rs.) | PE Ratio | Net Income (Rs. in cr.) | Return on Equity (%) | Debt to Equity (%) |
| MMTC Ltd | Commodities Trading | 11,205.00 | 74.70 | 7.17 | 55.71 | 247.26 | 14.35 |
| Sanofi India Ltd | Pharmaceuticals | 18,777.79 | 8,153.40 | 31.13 | 137.70 | 52.65 | 1.87 |
| Fine Organic Industries Ltd | Specialty Chemicals | 13,983.40 | 4,560.80 | 22.62 | 94.20 | 49.44 | 1.85 |
| Archean Chemical Industries Ltd | Commodity Chemicals | 8,383.59 | 679.40 | 21.91 | 101.53 | 45.18 | 4.85 |
| Castrol India Ltd | Commodity Chemicals | 20,905.10 | 211.35 | 24.19 | 241.94 | 43.12 | 3.63 |
| IDFC Ltd | Diversified Financials | 19,895.81 | 124.35 | 4.69 | 210.04 | 41.36 | 0.00 |
| Indian Energy Exchange Ltd | Power Trading & Consultancy | 14,169.84 | 159.35 | 46.32 | 91.80 | 40.72 | 1.76 |
| Anand Rathi Wealth Ltd | Asset Management | 16,520.92 | 3,949.70 | 73.44 | 56.61 | 40.24 | 7.65 |
| Computer Age Management Services Ltd | Diversified Financials | 15,988.22 | 3,253.40 | 56.05 | 89.29 | 39.89 | 11.92 |
| Gillette India Ltd | FMCG – Personal Products | 20,226.13 | 6,207.15 | 56.87 | 103.95 | 38.45 | 0.01 |
Note: The information is dated 25th April 2024. We have listed the top 10 fundamentally strong small-cap stocks from Tickertape Stock Screener based on the following parameters:
- Stock Universe: Nifty 500
- Market Cap: Small-cap
- Net income: Set to Positive – Set the lower limit to zero
- Return on equity: Set to high
- Debt-to-equity ratio: Set to Low
Top 10 Small-Cap Stocks – Based on 1-Yr Return
| Name | Sub-Sector | Market Cap (Rs. in cr.) | Close Price (Rs.) | PE Ratio | 1Y Return (%) |
| Jai Balaji Industries Ltd | Iron & Steel | 18,785.87 | 1,089.35 | 21.36 | 1,953.44 |
| Inox Wind Ltd | Heavy Electrical Equipments | 21,039.98 | 645.50 | -31.55 | 512.72 |
| Anand Rathi Wealth Ltd | Asset Management | 16,520.92 | 3,949.70 | 73.44 | 362.44 |
| HBL Power Systems Ltd | Batteries | 13,657.39 | 492.70 | 138.44 | 340.30 |
| Schneider Electric Infrastructure Ltd | Heavy Electrical Equipments | 17,901.72 | 748.70 | 144.79 | 327.46 |
| Chennai Petroleum Corporation Ltd | Oil & Gas – Refining & Marketing | 16,025.84 | 1,076.20 | 5.84 | 315.12 |
| Sobha Ltd | Real Estate | 16,623.16 | 1,752.65 | 159.53 | 283.05 |
| Jupiter Wagons Ltd | Rail | 17,297.78 | 419.55 | 143.22 | 282.28 |
| Action Construction Equipment Ltd | Heavy Machinery | 18,492.28 | 1,553.85 | 107.76 | 262.46 |
| Himadri Speciality Chemical Ltd | Commodity Chemicals | 18,107.78 | 367.60 | 44.08 | 261.63 |
Note: The information is dated 25th April 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 500
- Market Cap: Small-cap
- 1Y Return: Set to high (Sort from highest to lowest)
What are Small-Cap Stocks?
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.
Features of Small-Cap Stocks
- Small-cap companies are ranked 251 and above in terms of market capitalisation.
- Small-cap stocks are relatively new businesses compared to mid and small-cap entities.
- Small-cap stocks have the potential for high growth, which means the possibility of yielding high returns to their stockholders is also high.
- Small-cap stocks can be great wealth generators when held for the long term.
- Some small caps can be multibagger stocks if they generate very high returns.
- Small-cap 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 small-cap stocks may be undervalued because they may not be as recognised as their counterparts.
- Small-caps that do well over time become mid and large-cap stocks.
- Small-cap stocks are the least liquid stocks as they are not well recognised and are traded less often.
What is the Small-Cap Stock Index?
The market has benchmark small-cap indices that track the performance of small-cap stocks in the Indian stock market.
Who Should Invest in Small-Cap Stocks?
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.
Factors to Consider While Analysing Small-Cap Stocks
If you are thinking of investing in small-cap stocks, you need to analyse certain factors like,
- Company’s management – Irrespective of the size of the company, you must look into the top management, i.e., the CEO, CFO, etc. Check if they have run any business successfully before. Also, one pro tip would be to check if the top management has shares in the company. Having shares in their company can indicate that they trust their business and would work for its success.
- Company growth – One way to look at a company’s growth is to check how much a company is earning and how much money they have in hand. However, small-cap companies can have limited cash flow. So check if they have good annual revenue. Also, their operating margins indicate whether a company is good at turning its sales into profits.
Note that usually, companies can operate at a loss during their initial days. It would take time to build a client base and become profitable or break even. In the case of small-cap companies, analyse their long-term growth potential.
Advantages of Small-Cap Stocks
- Good growth potential – Experts say that small-cap stocks have high growth potential and can perform well in the long term.
- Fairly priced – As DII (Domestic Institutional Investors) and FIIs (Foreign Institutional Investors) mostly prefer large-cap stocks, the price of the small-cap stocks is maintained fairly.
Disadvantages of Small-Cap Stocks
- Liquidity – As fewer investors invest in small-cap stocks, it can be hard to sell.
- Risk – Market conditions can easily affect small-cap stocks compared to large-cap or mid-cap stocks. However, an investor can manage this through the right way of portfolio diversification.
Is It Worth Having Small-Cap Stocks in Your Portfolio?
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.
Small Cap Stocks FAQs
What is a small cap?
A small cap is a type of market capitalisation of a company. The other categories are mid and large-cap.
What is a small-cap stock?
Shares of companies having a market capitalisation of less than Rs. 5,000 cr. are small-cap stocks. In other words, these are issued by small-cap companies in India. These are ranked 251 and above in the stock market.
How to find small-cap stocks?
One of the easiest, quickest, and simplest ways to find small-cap stocks is using Tickertape. Using its intuitive Stock Screener, which is built with over 200+ filters, you can get a list of NSE small-cap stocks based on your desired parameters. All you have to do is launch the Tickertape Stock Screener and add your desired filters, such as total debt, net profit margin, and so on. There you go, you have a list of small-cap stocks in India in no time! What’s more, you can add multiple small-cap shares to your Basket and buy/sell them at once using the Transactions feature.
What are the best small-cap stocks to buy today?
You can use Tickertape’s Stock Screener to filter the best small-cap stocks based on parameters that matter to you. Once you get a list of small-cap companies in India, use Tickertape’s Stock Pages to analyse individual stocks in order to make well-informed investment decisions.
What are the risks of investing in small-cap stocks?
Small-cap companies that issue such shares are relatively newer than mid-cap and large-cap entities. Although they have greater growth potential and are likely to offer better returns in the long term, they lack ample financial resources and efficient managerial skills like those of large-cap companies. This puts them at risk in a falling market, making them highly risky.
What are the benefits of investing in small-cap stocks?
Although small-cap stocks are risky, they have the potential to yield high returns. This makes them suitable investments for aggressive investors. When invested for long, small-cap shares can help accumulate wealth.
How to get the list of small-cap stocks in NSE?
You can get the list of small-cap stocks in NSE easily on Tickertape by following the steps below:
- Login to Tickertape
- Go to Stock Screener
- Select ‘Smallcap’ under the ‘Market Cap’
Find the list of all small-cap stocks listed in the NSE.
How to get the list of small-cap IT stocks?
You can get the list of small-cap IT stocks on Tickertape with just two clicks. Follow the steps below:
- Login to Tickertape
- Go to Stock Screener
- Select ‘Smallcap’ under the ‘Market Cap’
- Under the ‘Sector’ select ‘Information Technology’
How to get debt-free small-cap stocks in India?
You can get the list of debt-free small-cap stocks in India by following the steps below:
- Login to Tickertape
- Go to Stock Screener
- Select ‘Smallcap’ under the ‘Market Cap’
- Click on ‘Add Filter’
- Search for ‘Total Debt’
- Sort the ‘Total Debt’ from low to high and get the list of small-cap stocks with no debts.
What are the top small-cap stocks to buy in India?
According to the highest to lowest 1-yr return, these are the top 10 small-cap stocks – Jai Balaji Industries Ltd, Inox Wind Ltd, Anand Rathi Wealth Ltd, HBL Power Systems Ltd, Schneider Electric Infrastructure Ltd, Chennai Petroleum Corporation Ltd, and Sobha Ltd.
Discover Related Stock Collections
Check out our other stock collections that may be of interest to you:
As an insatiable reader and learner, I’ve spent the last two years exploring the world of finance. With my creative mind and curious spirit, I love making complex finance topics easy and fun for everyone to understand. Join me on my journey as we navigate the world of finance together!
- Best Mutual Funds for Children – Features, Benefits, Risks, Tax, And More - Jun 18, 2024
- Best Battery Stocks in India – 2024 - Jun 18, 2024
- Top 10 REITs (Real Estate Stocks) in India (2024) - Jun 18, 2024
