Last Updated on Aug 8, 2022 by Vyshakh
Small cap stocks belong to companies of the small-cap category. These have the highest growth potential compared to mid and large cap stocks. In this article, we discuss small cap stocks and their features. Let us also look at several lists of small cap stocks based on total debt, earnings per share, dividend per share, net profit margin, and return on equity.
Table of Contents
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 its stockholders is also high.
- Small cap stocks can be great wealth generators when held for 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. NSE tracks the small cap category stocks through Nifty Smallcap 100, and BSE does it via BSE Smallcap.
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.
Small cap stocks list
Following are five lists of top small cap stocks in India based on several parameters.
Based on total debt
|Name||Sub-Sector||Market Cap||Close Price||Total Debt|
|Bank of Maharashtra Ltd||Public Banks||11,879.33||17.65||0.00|
|City Union Bank Ltd||Private Banks||12,021.95||162.55||0.00|
|RBL Bank Ltd||Private Banks||5,782.32||96.45||0.00|
|Brightcom Group Ltd||Advertising||9,030.20||44.75||0.00|
|Central Depository Services (India) Ltd||Stock Exchanges & Ratings||12,133.50||1,161.10||0.00|
|Delta Corp Ltd||Theme Parks & Gaming||5,298.08||198.10||0.00|
|Multi Commodity Exchange of India Ltd||Stock Exchanges & Ratings||6,708.99||1,318.00||0.00|
|NBCC (India) Ltd||Construction & Engineering||5,922.00||32.90||0.00|
|UTI Asset Management Company Ltd||Asset Management||9,225.61||726.65||0.00|
|BSE Ltd||Stock Exchanges & Ratings||9,293.58||687.05||0.02|
Note: The information is dated 4th August 2022. We have listed the top 10 NSE small cap stocks based on the following parameters:
- Nifty Smallcap 100
- Total debt
Based on net profit margin
|Name||Sub-Sector||Market Cap (Rs. in cr.)||Close Price (Rs.)||Net Profit Margin (%)||5Y Avg Net Profit Margin (%)|
|Central Depository Services (India) Ltd||Stock Exchanges & Ratings||12,133.50||1,161.10||50.99||46.06|
|Aptus Value Housing Finance India Ltd||Home Financing||14,477.21||291.20||44.05||38.13|
|UTI Asset Management Company Ltd||Asset Management||9,225.61||726.65||40.25||36.05|
|CE Info Systems Ltd||Software Services||6,983.88||1,311.70||35.96||24.71|
|Multi Commodity Exchange of India Ltd||Stock Exchanges & Ratings||6,708.99||1,318.00||33.11||38.62|
|Computer Age Management Services Ltd||Diversified Financials||12,114.45||2,475.80||30.96||24.65|
|Motilal Oswal Financial Services Ltd||Diversified Financials||11,394.37||764.40||30.32||21.46|
|Latent View Analytics Ltd||IT Services & Consulting||7,392.57||368.85||28.69||29.56|
|IDFC Ltd||Diversified Financials||9,491.17||59.45||27.55||-83.48|
|BSE Ltd||Stock Exchanges & Ratings||9,293.58||687.05||27.41||30.13|
Note: The information is dated 4th August 2022. We have listed the 10 best small cap stocks in India based on the following parameters:
- Nifty Smallcap 100
- Net profit margin
Based on dividend per share
|Name||Sub-Sector||Market Cap (Rs.)||Close Price (Rs.)||Dividend Per Share (Rs.)||Dividend Yield (%)||3Y Historical Dividend Growth (%)|
|Computer Age Management Services Ltd||Diversified Financials||12,114.45||2,475.80||38.75||1.56||19.92|
|Angel One Ltd||Investment Banking & Brokerage||10,939.55||1,313.10||27.1||2.05||115.71|
|Mahanagar Gas Ltd||Gas Distribution||7,757.02||785.30||25||3.18||7.72|
|Cyient Ltd||Software Services||9,053.99||820.45||24||2.92||16.96|
|Sonata Software Ltd||IT Services & Consulting||7,405.26||712.55||21||2.95||18.10|
|UTI Asset Management Company Ltd||Asset Management||9,225.61||726.65||21||2.89||61.34|
|Mastek Ltd||IT Services & Consulting||6,296.37||2,094.20||19||0.76||30.75|
|Multi Commodity Exchange of India Ltd||Stock Exchanges & Ratings||6,708.99||1,318.00||17.4||1.32||-4.54|
|J B Chemicals and Pharmaceuticals Ltd||Pharmaceuticals||13,865.95||1,794.20||16.5||0.92||48.88|
|Central Depository Services (India) Ltd||Stock Exchanges & Ratings||12,133.50||1,161.10||15||1.29||55.36|
Note: The information is dated 4th August 2022. We have listed the above small cap shares in India based on the following parameters:
- Nifty Smallcap 100
- Dividend per share
- Dividend yield
- 3-yr historical dividend growth
Based on EPS
|Name||Sub-Sector||Market Cap (Rs. in cr.)||Close Price (Rs.)||Earnings Per Share (Rs.)|
|BASF India Ltd||Diversified Chemicals||12,420.38||2,869.4||137.42|
|DCM Shriram Ltd||Diversified Chemicals||15,549.32||1,007.7||118.84|
|Balaji Amines Ltd||Specialty Chemicals||11,903.64||3,673.85||113.70|
|Lux Industries Ltd||Apparel & Accessories||5,923.21||1,969.7||112.95|
|HEG Ltd||Electrical Components & Equipments||4,934.82||1,278.6||111.67|
|Gujarat Narmada Valley Fertilizers & Chemicals Ltd||Fertilizers & Agro Chemicals||11,717.79||753.95||110.05|
|Mastek Ltd||IT Services & Consulting||6,296.37||2,094.2||106.52|
|Motilal Oswal Financial Services Ltd||Diversified Financials||11,394.36||764.4||88.03|
|Angel One Ltd||Investment Banking & Brokerage||10,939.55||1,313.1||75.87|
|Mahanagar Gas Ltd||Gas Distribution||7,757.01||785.3||60.43|
Note: The information is dated 4th August 2022. We have listed the 10 best small cap shares based on the following parameters:
- Nifty Smallcap 100
- Earnings per share
Based on return on equity
|Name||Sub-Sector||Market Cap (Rs.)||Close Price (Rs.)||Return on Equity (%)||5Y Avg Return on Equity (%)|
|Chemplast Sanmar Ltd||Building Products – Pipes||7,507.83||474.85||51.09||25.76|
|Computer Age Management Services Ltd||Diversified Financials||12,114.45||2,475.80||49.33||37.44|
|Angel One Ltd||Investment Banking & Brokerage||10,939.55||1,313.10||46.02||27.20|
|Tanla Platforms Ltd||Software Services||10,369.60||763.90||44.66||5.67|
|Sonata Software Ltd||IT Services & Consulting||7,405.26||712.55||37.56||34.61|
|Chambal Fertilisers and Chemicals Ltd||Fertilizers & Agro Chemicals||13,333.63||320.45||36.15||26.12|
|Balaji Amines Ltd||Specialty Chemicals||11,903.64||3,673.85||33.12||25.69|
|Lux Industries Ltd||Apparel & Accessories||5,923.22||1,969.70||31.19||28.31|
|BASF India Ltd||Diversified Chemicals||12,420.38||2,869.40||28.86||18.63|
|Motilal Oswal Financial Services Ltd||Diversified Financials||11,394.37||764.40||25.70||20.15|
Note: The information is dated 4th August 2022. We have listed the 10 top small cap stocks on NSE based on the following parameters:
- Nifty Smallcap 100
- Return on equity
- 5-yr average return on equity
Small cap stocks FAQs
What is small cap?
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 that 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 paramteres 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, which issue such shares, are relatively newer compared to 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 to 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.