Top 10 smallcap stocks in India | Smallcap stocks in India with immense growth potential

#10 Happiest Mind

Established in 2011, Happiest Mind is a digital transformation, infrastructure, security, and product engineering services company. It has the tagline of “Born Digital. Born Agile'' which clearly tells that the company is focused on digital technology and agile business. In fact, 97% of the business of Happiest Mind is from digital themes including IoT, blockchain, cloud, big data, advanced analytics, etc.

Since 2019, Happiest Mind revenues have jumped from Rs 590 Cr to currently at Rs 739 by Dec 2020 at a CAGR growth rate of 13.7%. The profits have increased from 14 Cr in Mar 2019 to Rs 132 Cr by Dec 2020 at a CAGR of 260%. That's an insane growth number! Happiest Mind recently had an IPO in Sep 2020 at a price band of Rs 166. It got an amazing response and the share was listed at a premium of 111% at Rs 358 and currently at Rs 393 in Feb 2021. So it is just the start of stock market journey of Happiest Mind. Currently, it has a market cap of Rs 5,800 Cr.

If we look at the future, needless to say, the future is digital. Be it ecommerce, online education, online payment, online health checkup, everyone is going digital. In fact there is a parallel economy being built in the digital world. And it is just the beginning. There is a long long way and this would certainly benefit companies like Happiest Mind.

#9 Tasty Bites

Established in 1995, Tasty bites is a leading brand of ready to eat products. It basically operates in 2 categories: Consumer category and food services. Consumer business includes ready-to-eat and easy-to-cook, all natural and preservative free food products covering Indian and Asian cuisine with a balance of taste and nutrition.

Food services is a B2B segment where Tasty bites offers a range of products including sauces, meals and frozen food to various QSR chains, cloud kitchens and HoReCa i.e. Hotels, Restaurant and Catering segment and new age food companies. Some of its clients include Jubilant foodworks, Budget King, Pizza hut, etc.

Since Mar 2010, Tasty Bites revenues have jumped from Rs 68 Cr to currently at Rs 426 Cr by Mar 2020 at a CAGR growth rate of 20%. The profits have increased from 7 Cr in Mar 2010 to Rs 41 Cr by Mar 2020 at a CAGR of 20%. Tasty bites had an IPO in MArch 2017 and since then , its share price has jumped from Rs 4,600 to currently at Rs 14,210 at a brilliant CAGR of 32.5%. It has a market cap of Rs 3,600 Cr.

If we look at the future growth, there is an increasing demand for ready to eat food due to an increasingly busier lifestyle. Moreover, people now prefer healthier alternatives with focus on taste. Some of the other factors include rising young population preferring new cuisines, consolidation from unorganized to organized players in food service market and rise of cloud kitchens. All these factors would contribute to the growth of Tasty Bites for a very long term.

#8 Radio Khaitan.

Established in 1943, Radio Khaitan is a “desi company making english daru”. Radio Khaitan operates in various category of liquor including Whisky, Rum, Brandy, Vodka, Gin and Ready to drink. Some of the popular brands include Magic Moment Vodka and Morpheus Brandy. Company has recently launched many new brands like 8PM premium black whiskey, Jaisalmer Indian Craft gin, Rampur Indian Single Malt, etc.

Radico Khaitan revenues have increased from Rs 923 Cr in Mar 2011 to Rs 2,309 Cr by Dec 2020 at a CAGR of 10%. Its profits have jumped from 73 Cr in Mar 2011 to Rs 235 Cr by Dec 2020 at a CAGR of 12.7%. In fact, in the last 3 years, company’s profits have grown at a CAGR of 45% after the company has launched various brands in the premium segment. In the last 5 years, Radico Khaitan shares have jumped from Rs 100 to currently at Rs 542 at a CAGR of 40%. It has has a market cap of Rs 7250 Cr.

If we look at the future, there is increasing consumption of liquor. Factors like increasing young population entering drinking age, increasing income and spending on branded liquor and greater acceptance of social drinking would continue to fuel the growth for Radico Khaitan as drinking become more and more part of lifestyle. Company is investing heavily on brand building and product portfolio building to cater to the growing trend of premiumisation and aspirational brands in India as well as export the product all over the world.

#7 Lauras Lab.

Established in 2005, Laurus lab is one of the leading manufacturers of API i.e. Active Pharmaceutical Ingredient which are used in Anti-Retroviral (ARV) i.e. treatment of HIV, Oncology i.e. treatment of cancer, Cardiovascular i.e. treatment of heart problem, Anti-Diabetics, Anti-Asthma and Gastroenterology i.e. treatment of digestive system. Company has forward integrated and expanded into manufacturing of finished dosage or final medine. It is also into contract manufacturing where it manufactures the API and medicines for top global pharma companies all over the world.

Lab revenues have jumped from Rs 1160 Cr in Mar 2014 to currently at Rs 4241 Cr by Dec 2020 at a CAGR growth rate of 21%. The profits have increased from 97 Cr in Mar 2014 to Rs 797 Cr by Dec 2020 at a CAGR of 36.6%.Laurus lab has an IPO in dec 2016 but since then the share price didn’t perform well due to negative sentiments towards pharma stocks. However, in the last 1 year, the share has jumped almost 6 times from the lows of Rs 65 to currently at Rs 375. Currently, it has a market cap of Rs 20,000 Cr.

In the future, there would be an increase in demand for APIs for manufacturing of medicine. This demand is from both the domestic market as well as international market and is mainly driven by factors including increase in healthcare expenditure, rise of lifestyle diseases and companies looking for alternatives of China with Indian government focusing a lot on “AtmaNirbhar Bharat” and “Make in India” initiatives. All these factors would continue to drive growth for Laurus lab and this is one company that would become a mid cap and then a large cap.

Now, next 4 companies are from Chemical sector. I tried to reduced the allocation of Chemical but I could’t resist including these 4 companies. The major reason is “immense growth potential of Chemical sector in India”. After the COVID disrupted the entire supply chain of the world, there is a new theme that has emerged. It is called “China plus one”. It means, now companies all over the world want to reduce the dependency from China. And the best alternative is India. So this has created a humongous growth opportunity for Chemical sector and it could see a huge wave of growth like we saw for the IT sector in the past.

#6 Deepak Nitrite

Established in the 1970s, Deepak Nitrite is a leading and fastest growing chemical intermediates company with a diversified presence across three segments:

  • Basic Chemicals (BC),
  • Fine and Specialty Chemicals (FSC)
  • Performance Products (PP).
Deepak Nitrite is ranked among Fortune Next 500 companies and recognized among the top 25 wealth creators by Fortune Magazine, India. Its diversified product portfolio caters to segments like dyes and pigments, agrochemical, pharmaceutical, plastics, textiles, paper and home and personal care segments in India and overseas.

Deepak Nitrite revenues have jumped from Rs 1327 Cr in Mar 2015 to Rs 4,230 Cr by Mar 2020 at a CAGR growth rate of 26%. The profits have zoomed from 53 Cr in Mar 2015 to Rs 611 Cr by Mar 2020 at a CAGR of 63%. These are crazy growth numbers! In the last 5 years, Deepak Nitrite share price have jumped from Rs 64 to Rs 1108 at a crazy CAGR of 76.8%. Its current market cap is Rs 15,000 Cr.

The biggest theme in Chemical sector is “China plus one”. Specially after COVID, companies all over the world are exploring the alternative of China so that they can reduce their dependency from China and minimize the business risk. India is set to be a key beneficiary of this shift.India is already the 6th largest producer of chemicals and has all the required skillset and technology to cater to ever growing global demand for chemicals.

In fact, even the Indian government is focusing a lot on the “Make in India” initiative and this would again help the Indian companies to flourish in the long term including the chemical sector. There would increase in demand not only from the global market but also from the domestic market due to increasing chemical consumption across industries.
Deepak Nitrite is bound to grow due to these trends.

#5 Alkyl Amine

Incorporated in 1979, Alkyl Amine is a global supplier of amines and amine-based chemicals to the pharmaceutical, agrochemical, rubber chemical & water treatment industries, among others. 

Alkyl Amine revenues have jumped from Rs 236 Cr in Mar 2011 to Rs 1,095 Cr by Dec 2020 at a CAGR growth rate of 17%. The profits have zoomed from 10 Cr in Mar 2015 to Rs 252 Cr by Dec 2020 at an exceptional CAGR of 40%. In the last 5 years, Alkyl Amine share has jumped from Rs 300 to currently at Rs 5300 at an unbelievable CAGR of 77%. It has a market cap of Rs 10,900 Cr.

Think this way- Alkyl Amine products are used as raw material in many industries like Pharma, Agro chemical and Rubber industries. Now, all these industries are growing at a good rate. So when these industries would grow, there would be more and more demand for raw material from Alkyl Amine and hence it would also grow. The Indian amines industry is oligopolistic which means there are very few players controlling the entire market with high barriers of entry for competitors. Alkyl Amine is one of the leading players with over 100 products and would continue to grow.

#4 Advance Enzyme

Established in 1957, Advanced Enzyme is a global leader in the manufacturing of enzymes and probiotics that are used across wide variety of industries like human health care and nutrition, animal nutrition, baking, fruit & vegetable processing, brewing & malting, grain processing, protein modification, dairy processing, speciality applications, textile processing and others. They aim to replace traditionally used chemicals with eco-friendly enzymatic solutions.

Advance Enzyme revenues have jumped from Rs 116 Cr in Mar 2011 to Rs 479 Cr by Dec 2020 at a CAGR growth rate of 15.6%. The profits have zoomed from 17 Cr in Mar 2011 to Rs 146 Cr by Dec 2020 at a fantastic CAGR of 25%. Advanced enzymes had an IPO in August 2016 and it wsa opened at Rs 284. But since then the share price was in downward trend till it reached a bottom of Rs 91 in Mar 2020. But since then, it has recovered to current level of Rs 373. It has a market cap of Rs 4,200 Cr.

If we look at the future of food enzyme market, factors like better food quality, rising demand of processed food and increased awareness about nutrition-rich foods have contributed towards the market’s growth. With growing demand of environment-friendly manufacturing processes, the market is slowly shifting towards a path of promising and sustainable future. Not only this, there is immense potential in animal nutrition as well as specialty enzyme used in Pharma industries which would drive the growth for Advanced enzyme.

#3 Fine Organics

Established in 1970, Fine Organic Industries Limited is one of the early mover and the largest manufacturers of Oleo-chemical based additives in India and a key producer globally. In simple language, there are many products out there like skin cream, hair oil, cosmetics like lipstick, eyeshadow, etc. that require some oil and fats as raw material. As the awareness for natural products is increasing, there is more demand for natural raw material rather than synthetic products. And that’s where oleo-chemicals come into picture. Oleo-chemicals are compounds derived from natural fats and oils that can be used as raw material across a wide range of industries including personal care, cosmetics, coating, adhesive, lubricants, food, pharmaceuticals, etc.Fine organics is also a leading producer of the widest range of additives for foods, polymers, cosmetics, coatings etc.

Fine Organics revenues have jumped from Rs 778 Cr in Mar 2017 to Rs 1038 Cr by Mar 2020 at a CAGR growth rate of 10%. The profits have zoomed from 78 Cr in Mar 2017 to Rs 165 Cr by Mar 2020 at a fantastic CAGR of 28.3%. Fine organics had its IPO in July 2018 and since then its share price has jumped from Rs 807 to currently at Rs 2415 at an exceptional CAGR of 55%. It has a current market cap of Rs 7,400 Cr.

If we look at the future growth, there is a huge increase in awareness towards natural, healthy and environmental friendly products in several industries like plastics, food, cosmetics, rubber, coating, etc. For example, in the food category, due to busy lifestyles there is an increase in usage of ready-to-eat packaged food. In cosmetics, there is a growing popularity of anti ageing cream, moisturizing cream and sunscreen especially in the natural category.And that’s where Fine organics comes into picture with very bright growth prospects.

#2 Lux industries.

Established in 1995, Lux industries is #1 hosiery company in India in terms of volume turnover with a product mix of 5000+ SKUs. It has more than 100 products across 15 brands including vests, briefs, trunks, boxers, thermals, panties, leggings, t-shirts, etc. Some of the popular brands of Lux industries include: Lux Venus innerwear, Lux Inferno thermals, Lux coot’s wool winter wear, Lux cozi, Onn comfort, Lyra, Lux Touch, GenX and the latest addition of One8 with Virat Kohli.

Lux industries revenues have jumped from Rs 334 Cr in Mar 2010 to Rs 1203 Cr by Mar 2020 at a CAGR growth rate of 13.6%. The profits have zoomed from 4 Cr in Mar 2010 to Rs 126 Cr by Mar 2020 at a fantastic CAGR of 41%. Again, exceptional growth numbers! In the last 5 years, Lux industries share price has increased from Rs 560 to Rs 1830 at a CAGR of 26.7%. It has a current market cap of Rs 4,600 Cr.

If we look at the future, there is a rise in middle class people which represent the biggest chunk of people in India with preference to branded, comfortable and value for money products. Lux industries caters to this mass segment with quality products at an affordable price. Moreover, there is a rise in the Athleisure category where people prefer comfortable clothes. There is also a rise in the premium segment due to rising income level and great spending. Lux industries cater to all segments from mass to mid premium to premium and would continue to grow.

#1 Affle India

Established in 2006, Affle India is a global technology company with proprietary consumer intelligence platform that delivers consumer acquisitions, engagements and transactions through relevant mobile advertising. So basically, this company help global brands enhance return on marketing investment through contextual mobile ads and also by reducing digital ad fraud.

Affle India revenues have jumped from Rs 167 Cr in Mar 2018 to Rs 455 Cr by Dec 2020 at a CAGR growth rate of 44%. The profits have zoomed from 28 Cr in Mar 2018 to Rs 92 Cr by Dec 2020 at a fantastic CAGR of 54%. These are insane growth numbers! Affle India recently had an IPO in Aug 2019. Since then its share price has jumped from Rs 843 to currently at Rs 5347 at a crazy CAGR of 242%. Affle India has a current market cap of Rs 13,600 Cr.

If we look at the future growth prospects, the future is digital and digital marketing is the future of marketing. I am sure you all know the importance of digital marketing. On top of that, the future is mobile. So Affle is well placed with its business of mobile based digital marketing with its proprietary algorithm of insight generation engine and hence poised to grow at a very very fast rate.

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Disclaimer: This article is only for education purpose. Consult your financial Advisor before investing your money.

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