In the world of stock investing, small-cap stocks have always been viewed as a ‘high-risk, high-reward’ proposition. While these stocks offer the potential for significant returns, they are also known for their volatility and unpredictability.
In FY24 so far, small-cap stocks have emerged as the shining stars of the market, rewarding their shareholders handsomely. The BSE SmallCap index in the last three months rallied 21%, outperforming the Nifty 50 index, which recorded a gain of 10.40% during the same time frame.
Amidst this remarkable trend, we have compiled a list of small-cap stocks that are trading under ₹50 apiece and have more than doubled investors' wealth in a year.
Ujjivan Small Finance Bank topped the list with a gain of ₹157.3% over the last one-year, spiking from ₹14.75 apiece to ₹37.90. This stellar rally can be attributed to the bank's improved performance in all four quarters of FY23.
In the first quarter of FY23, the bank achieved a net profit of ₹203 crore, followed by a stronger performance in the subsequent quarter with a net profit of ₹294 crore.
During the third and fourth quarters of FY23, the bank recorded net profit of ₹293 crore and ₹310 crore, respectively. Overall, the bank concluded FY23 with a net profit of ₹1,100 crore, showcasing a significant turnaround from a net loss of ₹415 crore in FY22.
| Scrip Name | Last traded price (Rs) | % return in the last one year |
| Ujjivan Small Finance Bank | 37.90 | 157 |
| South Indian Bank, | 19.30 | 154 |
| UCO Bank | 27.40 | 148 |
| Rama Steel Tubes | 36.90 | 140 |
| Suzlon Energy | 15.30 | 126 |
| Punjab & Sind Bank | 31.95 | 123 |
| Lloyds Steels Industries | 23.60 | 120 |
The second stock on the list was South Indian Bank, whose shares have delivered a spectacular return of 154% over the last one-year time. During this period, the bank's shares have appreciated from ₹7.60 apiece to ₹19.30.
In terms of yearly performance, the shares gained 112.43% in CY22, marking a complete turnaround as they experienced a continued downward trend from CY18 to CY21, losing almost 71% of their value. In CY23 so far, the shares have soared marginally by 3%.
Earlier in March, domestic brokerage firm ICICI Securities raised its target price on the stock to ₹25 apiece. The brokerage stated that, after the onboarding of a new managing director in September 2020, the bank is delivering in line with its Vision 2025 program.
Considering the legacy of higher stress in the bank's corporate and mid-corporate segments, the new management revisited the business strategy and put emphasis on ‘quality over quantity', it added.
UCO Bank was next on the list. The company's shares, which were trading at ₹11.05 apiece, have zoomed 148% to trade at the current level of ₹27.40. Notably, the shares made a significant gain of 58% in December alone.
This solid performance came after the Reserve Bank of India (RBI) granted permission in November to nine Russian banks to establish special Vostro accounts with UCO Bank and IndusInd Bank to facilitate overseas trade in rupees.
In addition to that, the bank also improved its financial performance in FY23, with net profit growing to ₹1,862 crore, a significant rise when compared to a net profit of ₹930 crore posted in FY22.
Next on, Rama Steel Tubes, one of the leading manufacturers of steel pipes & tubes, which saw its share price grow from ₹15.35 to ₹36.90, reflected a phenomenal rise of 140%. In CY22, the stock generated a staggering return of 145%, and the year before that, it produced a whopping return of 611.65%.
Likewise, Suzlon Energy, which is the largest renewable energy solutions provider in India, saw its shares climb from ₹6.75 apiece to ₹15.30 in the last one-year period, resulting in a staggering gain of 126%.
The surge in Suzlon Energy's stock price over the last one-year can be attributed to a combination of factors, including the successful acquisition of multiple wind power projects coupled with a robust financial performance.
Punjab & Sind Bank was another banking stock that witnessed a sharp rally from ₹14.30 apiece to ₹31.95 in the last one year, resulting in a fabulous gain of 123.43%. Between November and December of last year, the shares zoomed 158%.
From ₹10.75 apiece a year ago, shares of Lloyds Steels Industries have skyrocketed to the current level of ₹23.60, rewarding their shareholders with an impressive return of 120%.
It is important to note that investing in small-cap stocks also comes with inherent risks. While the rewards can be enticing, volatility and liquidity challenges can pose potential hurdles. Investors should exercise caution and conduct thorough research before venturing into this ‘high-risk, high-reward’ domain.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.
