Hi! It is believed that small-cap stocks have higher growth potential than large and mid-cap stocks.
But at the same time, there is also more risk.
As per SEBI definition small-cap companies whose ranking in terms of market capitalization is 251 or more.
Nifty Small Cap 250 Index is showing a strong recovery in July. Of course, the eyes of mutual funds will be on small-cap companies.
That's why today we will talk about 5 such small cap companies, which were the most bought by mutual funds in July.
We have considered the market closing prices of 5 September 2022.
We will tell you in the past about the value of shares bought for the company in which the mutual fund bought the most. So let's start today's video.
1. The first company is Nuvoco Vistas Corporation Limited.
Nuvoco Vistas is one of the largest cement and concrete companies in India with a consolidated capacity of 23.8 million tonnes per annum.
Nuvoco is part of the Nirma Group which holds approximately ~71% stake in the company.
In July, the mutual fund bought approximately ₹107.68 crores in the company.
Nuvoco is the fifth largest cement company in India and the market leader in terms of installed capacity in eastern India.
From the industry point of view, East India is ahead in the growth of cement consumption.
The company generated total revenue of ₹9,360 crores in FY22, showing a growth of 24.43% on a YoY basis.
Nuvoco posted an EBITDA of ₹1538.78 crores and has also repaid debt of ₹1350 crore with the help of IPO funding.
In FY20, the company acquired Emami Cement through debt funding.
Along with this, the company is also planning a CAPEX of ₹ 2500 crore by 2025.
Due to these reasons, the debt of the company has increased to a great extent.
Let's take a look at some of the key financial and technical ratios of the company now released.
2) The second company on our list is Zydus Wellness Limited.
It acts as an integrated consumer business that captures the entire value chain of development, production, marketing, and distribution of health and wellness products.
Their product portfolio is comprised of well-known brands such as Glucon-D, Sugarfree, Everything, Nutralite, Complan, Niceil, Heinz, etc.
In July, mutual funds had bought approximately ₹112.35 crores in the company.
The existing brands in the company's product portfolio are growing rapidly and their Glucon-D brand recently crossed the 60% market share milestone.
What's more, the company's direct distribution reach has expanded very rapidly in the last 3-4 years and can still do decent growth.
After the economy reopened, the company's sugar-free brand's revenue growth slowed slightly in the last three quarters, mainly due to their spending on health and hygiene products.
The company also delivered a relatively soft quarter, probably due to the category slowdown and price cuts by the category leader.
As a result, Zydus Wellness has lost 0.7% of its market share in the last year.
The company is taking a lot of steps to make recovery gains in these 2 segments, which can be a monitoring point going forward.
As you can see on your screen, we have shown some key financial and technical ratios of the issuing company.
3. The third company is Granules India Limited
Granules India is a Hyderabad-based pharmaceutical company mainly engaged in drug manufacturing businesses
like Active Pharmaceutical Ingredients (APIs), Pharmaceutical Formulation Intermediates (PFIs), and Finished Dosages (FD).
In July, mutual funds had made purchases of approximately ₹159.92 crores in the company.
Granules India has the world's largest PFI and Single Site FD facility.
Also, the company sells its products to 300+ customers and the company has a presence in 80+ countries.
And one more thing with the company's strong R&D team, the company has been able to develop a variety of drugs cost-effective and partner,
due to which the company can make its competitive advantage.
The company spends 3-4% of its revenue on research and development.
The company's revenue has been increasing year after year but the EBITDA margin and profit have been lost.
In FY22, the company saw a growth of 16% in revenue but its EBITDA margins dipped to 16% and net profit to 25%.
Another concern is the company's rising borrowings and Capex, which could impact the company's balance sheet.
Let's take a look at some of the key financial and technical ratios of the company now released.
4. The fourth company on our list is GMM Pfaudler Ltd.
GMM Pfaudler is involved in the manufacture of corrosion-resistant glass-lined equipment.
The company is the largest supplier of process equipment to the pharmaceutical and chemical industries.
Process equipment used in refineries and processing plants.
With a 55% market share, GMM Pfaudler is India's largest company in the glass-lined equipment business.
In July, mutual funds made approximately ₹283.41 crore purchases in the company.
GMM Pfaudler is a global leader in the glass-lined equipment business.
The company has a strong in-house technology capability in this business segment which is its biggest strength.
62% of the company's consolidated revenues come from this segment.
To meet the growing demand in the industry in some of the saloons, the management has made regular Capex and acquisitions.
The company continues to grow its market share due to low-cost sourcing and achieving economies of scale.
After the Faudler acquisition, the company's debt has seen a significant increase.
After remaining debt free for so many years, the company has taken a lot of debt to take over.
If the company can manage debt due to its healthy free cash flow, investors should monitor the company's debt closely.
5. The 5th company is Sapphire Foods India Limited.
In Sapphire Foods Indian Sub-Continent! Brands, Yum Inc. is one of the largest franchises of Yum Brands!
The world's largest fast food corporation owns Kai brands like Pizza Hut, KFC, and Taco Bell.
Under Yum, the company operates 616 KFC, Pizza Hut, and Taco Bell restaurants in India, Sri Lanka, and the Maldives under the brand's multiple countries in the Indian subcontinent.
In July, mutual funds had bought approximately ₹293.83 crores in the company.
As you can see, Sapphire Foods reported a strong quarter this year.
The company has increased its consolidated revenue by 80% in Q1 FY23 and profit after tax by 15.70%.
The company has also added 37 new restaurants.
One more thing, the company can sell your inventory quickly because of the negative working capital cycle of the company.
This can be a strength for Sapphire Foods.
But the company has been facing macro factors such as the financial crisis in Sri Lanka or rising inflation, which could impact its margins.
In addition, the company faces intense competition from unorganized and organized Quick Service Restaurant (QSR) players
such as Domino's, McDonald's, and Burger King, which may also put pressure on their margins.
Let's take a look at some of the key financial and technical ratios of the company now released.
So these are the 5 small-cap companies in which mutual funds are buying the most in July.
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