5 Small-Cap Stocks Nearing 52-Week High. The Secret Behind Their Gains...
The Indian share market has been on a wild run since the beginning of the year. As a result, several stocks have touched their 52-week-high.
Fundamentally strong small-cap stocks have also been the upward swing the past month. Some of these have delivered more than a 100x return to investors over the years, making their investors wealthy with handsome gains.
Here are five small-cap stocks that are nearing their 52-week high and their secret to success:
#1 Chemfab Alkalis
Leading the list is chemical stock, Chemfab Alkalis.
The stock touched its 52-week high yesterday. It has given a return of 137% over the last year on the back of its China Plus strategy, import substitution and an agricultural boost.
Chemfab Alkalis is first major chemical organisation in India to introduce and implement innovative technologies in the chemical industry.
It is in the business of manufacturing basic inorganic chemicals and PVCO pipes.
Over the last five years, its revenue has grown at a CAGR of 5.8 per cent. The net profit margin also has grown by a CAGR of 2.4 per cent.
The growth was due to the improved outlook and the shift from China to India during the pandemic. This led to a rally in chemical stocks, making them among the multibagger stocks for 2022.
For the June 2022 quarter, the company saw a 109 per cent YoY increase in revenue at Rs 980 million. It also reported a 601 per cent YoY growth in net profit at Rs 214.6 million.
Going ahead, the company plans to commence construction activity in its Greenfield project at Karaikal, Puducherry. The pre-construction activities for a 250 TPD caustic soda plant with a 10,000 TPA aluminium chloride plant are progressing.
Chemfab Alkalis Share Price Performance – 1 Year
#2 Lumax Auto Technologies
Second on the list is auto component company, Lumax Auto Technologies.
The stock has given a 110x return over the past year. It is currently trading 4 per cent away from its 52-week high of Rs 302.6.
This was on the back of increasing offtake from OEMs and pent-up market demand for passenger vehicles.
The company, through its wholly owned subsidiaries and joint ventures, has been a manufacturer of a wide range of products, including integrated plastic modules, 2/3‐wheeler lighting, and emission systems.
It is engaged with OEMs, including passenger vehicle (PV), two-wheeler, 3-wheeler, and commercial vehicle segments.
The cliental base includes automobile giants like Bajaj Auto, Mahindra and Mahindra, and many more.
Over the last five years, its revenue has grown at a CAGR of 9.3 per cent. The net profit margin also has grown by a CAGR OF 15 per cent. It was on the back of the strong sales volume.
For the June 2022 quarter, the company saw a revenue growth of 61.9 per cent YoY at Rs 4.2 billion. It's net profit also grew 539.6 per cent YoY to Rs 218.1 million.
For the financial year 2023, it is focusing on the supply of Oxygen sensors. The reason is the increased demand due to regulatory mandates for the oxygen sensor in two-wheelers from 2024.
Lumax Auto Technologies Share Price Performance – 1 Year
#3 Andhra Papers
Third on the list is paper company Andhra Papers.
The stock has given a 110x return over the past year on the back of robust demand, consolidation in the sector, stable margins, and a ban on single-use plastic
It is currently trading 5 per cent away from its 52-week high of Rs 510.
Andhra Paper is one of the largest integrated paper and pulp manufacturers in India. It produces writing, printing and copier papers for foreign and domestic markets
Over the last five years, the company's revenue has grown at a CAGR of 3 per cent. Net profit has also grown by a CAGR of 22 per cent. This was on the back of a strong business outlook.
In its latest quarterly results, the company registered 74.9 per cent YoY increase in revenue at Rs 4.5 billion. Net profit grew by 224.9 per cent YoY to Rs 849.5 million.
The board has approved a capex of Rs 4 billion to rebuild and upgrade the existing pulp plant as a part of an expansion plan for 2023.
For the financial year 2023, the company is looking forward to improving the operating profit margin along with sales figures.
Andhra Papers Share Price Performance – 1 Year
#4 D- Link India
Fourth on the list is IT company D-Link India.
The stock has surged 32.2 per cent in a year on the back of addition to its smart AI-enhanced 4G Wi-Fi routers and strong business outlook.
It is currently trading 6 per cent away from its 52-week high.
D-Link India is a part of D-Link Corporation. It is one of the largest networking companies in India. The company is engaged in the marketing and distribution of networking products.
Over the last five years, the company's revenue has grown at a CAGR of 6 per cent. The net profit also has grown by a CAGR of 21 per cent.
For the June 2022 quarter, the company's revenue grew by 81.7 per cent YoY to Rs 2.9 billion. The net profit saw a growth of 90 per cent YoY at Rs 161.9 million.
For the financial year 2023, it is working on AI-enhancing routers for better performance and introducing low-budget routers.
D-Link Share Price Performance – 1 Year
#5 Apollo Tricoat Tubes
Last on the list is steel stock, Apollo Tricoat Tubes.
The stock has surged 14 per cent in a year due to a jump in the sales volume of the company. It is currently trading 6 per cent away from its 52-week high.
Apollo Tricoat Tubes is a steel tube and pipe manufacturing company. It is in the business of manufacturing steel pipes and tubes with a triple layer of coating.
Over the last five years, its revenue has grown at a CAGR of 35 per cent. The net profit also has grown by a CAGR of 58 per cent. The growth over the years has been due to higher prices and constant growth in sales volumes of the company.
For the June 2022 quarter, the company saw a 36 per cent YoY increase in revenue at Rs 7.9 billion. However, it reported a 35 per cent YoY de-growth in net profit at Rs 307 million. The de-growth was due to a correction in steel prices.
For the financial year 2023, the company is planning to expand it capacity as government allocated Rs 480 billion in the India's flagship affordable housing scheme.
Apollo Tricoat Tubes Share Price Performance – 1 Year
To Conclude
As you can see, small-cap stocks have been a profitable investment this year.
There are plenty of roses in this bush, there are also plenty of thorns. You wouldn't pick a rose off of a rose bush without first checking for thorns, and you shouldn't pick a stock trading on 52-week highs without doing your research first.
To achieve this, however, it is important to do your research and pick the right stocks for your portfolio.
Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.
This article is syndicated from Equitymaster.com.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
