Hello! If you have a choice between a developed economy and a developing economy, then which country would you like to invest in?
The answer is not simple but generally, a developing economy can give you relatively good returns.
The main reason for this is that it itself is in a developing stage and high growth is expected there.
Secondly, it may happen that the developed economies may have touched their saturation point and their growth rate has slowed down.
Being a relatively mature economy, it can also be considered a relatively safe investment destination.
The same thing happens in the case of companies as well.
Now we all know that risk and return go hand in hand.
A small-cap company has a lot of growth opportunities as compared to a large-cap company.
And we all keep trying to find such hidden gems, which will give us multi-bagger returns in the future.
So today we will tell you about 5 such high-growth small-cap stocks whose current market value is less than ₹ 100.
Of course with a higher growth potential comes higher risk.
It is important for investors to know that before investing in any company, they must do their own detailed research and analysis.
And it becomes even more critical in the case of small-cap companies because such companies have low coverage and limited information is available.
For retail investors, it is important that they look not only at company financials but also at things like business models, and corporate governance.
A small disclaimer, this list is not a buy or sell recommendation from our side.
So let's move on now. We have listed only companies that have:
Market cap is more than ₹100 crores and less than ₹5000 crores,
Debt to Equity Ratio is less than 0.5,
3-year sales growth CAGR of more than 20%,
3-year profit growth is more than 20% and,
3-year average return on equity is more than 25%.
We will cover the list of 3-year sales growth in ascending order of CAGR i.e. the company with the highest 3-year sales growth CAGR, which we will cover at the end.
So let's start today’s video.
The first company is Ajanta Soya Limited.
Ajanta Soya is engaged in the manufacturing of Vanaspati and various types of Cooking Oils.
Apart from this, the company also manufactures shortening products for bakeries.
Shortening products are those fat products that are made from 100% vegetable fats and oils.
The shortening products are good substitutes for butter which is used in making biscuits, puffs, pastries, etc.
Ajanta Soya’s 3 Year Sales CAGR is 24.64%.
A wide distribution network backs Ajanta Soya's products.
The company has its depots at strategically important locations like Jaipur, Noida, Meerut, and Agra.
The company has been able to deliver its products to its consumers through its 500 dealers and agents in urban and rural areas.
Reputed customers of the company include Britannia Industries Ltd, Parle Biscuits Private Ltd, Anmol Bakers Ltd, ITC Ltd, Mrs. Bectors Food Specialties Ltd, Surya Food Agro Ltd, etc.
For this reason, the company's counterparty credit risk is relatively low.
The biggest challenge before Ajanta Soya Limited is the tough competition in the market.
There are many small players in the market as well as big players in the branded segment of the edible oil industry.
Because of this, the company does not have pricing power and its operating margins remain low.
What's more, in times of rising inflation, the company will have to deal with volatility in raw material prices which could hurt its operating margins.
As you can see on your screen, we have shown some key financial and technical ratios of the company.
We have also included the values of 2 technical indicators so that you can see the stocks from a technical perspective as well.
We have used 2 indicators- 200 days moving average i.e. 200 days DMA and RSI (14).
If a company's stock price is trading above the 200 DMA, the stock can be considered bullish.
And if the price is trading down as compared to the 200 DMA then the stock can be said to be bearish.
In terms of RSI, RSI values below 30 are generally considered oversold thus, a trend reversal ie a downtrend can lead to an uptrend.
Similarly, an RSI value above 70 is considered overbought, and a trend reversal is likely.
The second company on our list is Dolat Algotech Ltd.
Dolat Algotech Limited is a Trading cum Clearing Member of NSE India that they’re in the business of Securities Broking and Trading.
The company does its business using Algo-trading.
That means, they execute their trade strategy through computers without any human intervention and earn profit from it.
Dolat Alogtech's 3-year sales CAGR is 26.03%.
The biggest strength of the company is the nearly 40 years of experience of its promoters.
Dolat Algotek has many successful trading strategies that they know how to make a profit using them.
The company has been earning pretty good profit for some time which we can see in their recent numbers.
The biggest challenge facing Dolat Algotech is to constantly innovate its trading strategies.
Due to the increasing competition, the company's competitive edge may come under threat.
And you know, the trading business is an inherently risky business.
There are many factors that are not within the control of the company such as market volatility or macro-economic conditions.
Due to these factors, the algorithm of the company may fail and they may suffer losses.
As you can see on your screen, we have shown some key financial and technical ratios of the company.
The third company on our list is Scandent Imaging Limited.
Scandent Imaging is a healthcare company that provides scanning and imaging solutions to the dental and ENT fraternity.
The company also has 2 hospitals.
Both the hospitals have offerings in General Surgery, Plastic Surgery, Gynecology, Cardiology, Proctology, Urology, Orthopedics, and ENT.
Scandent Imaging Limited’s 3-Year Sales CAGR is 43.66%.
A positive factor for the company is its improving profitability and increasing revenue.
Due to the increasing health awareness and COVID-19 in India, it is expected that this upward trend of the company will continue.
The biggest weakness of the company is its high debtor days.
Debtors Days is the average number of days it takes for a company to get payment from its customers.
The company's debtors seem to be increasing day by day and because of this their cash flow statement got affected.
With less cash on the balance sheet, it may be difficult for the company to grab new investment opportunities which may affect its growth going forward.
At the same time, the big threat before Scandent Imaging is their ongoing litigation in court which may make them look bad financially as well as brand-wise.
As you can see on your screen, we have shown some key financial and technical ratios of the company.
The fourth company on our list is Banas Finance Limited.
Banas Finance Limited is a Non-Banking Finance Company (NBFC) engaged in the business of Purchase, Leasing, Factoring, and Financing.
Along with this, the company is also present in share trading, investment, consultancy, and realty business.
Banas Finance’s 3-year sales CAGR is 91.80%.
The company had witnessed a very good performance in the last financial year.
The company is also almost debt-free.
Low leverage and recent sales and profit growth show that the company is growing and will continue to grow.
There is a risk for the company that their Non-Performing Assets (NPAs) could see an increase in the infrastructure and real estate lending space if any stress comes on their loan books.
In addition, compliance issues have come up throughout the company's history, which warrants our monitoring of its corporate governance.
As you can see on your screen, we have shown some key financial and technical ratios of the company.
And the fifth and last company on our list is Add-Shop E-Retail Limited.
Add-shop caters to e-retail emerging health care services where it is involved in the production of herbal, ayurvedic, and agro commodities.
Add-shop e-retail’s 3-year sales CAGR is 92.30%.
The company is showing strong growth in revenue and profitability along with significant improvement in margins.
The company has shown decent growth in FY22 despite unfavorable macroeconomic conditions, with higher raw material prices and higher energy costs.
The company has been able to improve its margins mainly due to higher prices and stronger cost controls.
Apart from this, the increasing health awareness among the people or the demand for organic products is also giving good support to the company.
According to the company, high investment costs, patent issuance, and low-profit margin pose a challenge to them.
The company needs to be export-oriented to maintain its performance.
But due to product variability and poor tie-ups with foreign countries, it has not been able to tap the export market well.
As you can see on your screen, we have shown some key financial and technical ratios of the company.
So these were the 5 small-cap growth companies whose price is less than ₹ 100 and which are running on the trajectory of rapid sales growth.
We remind you that these videos are for educational purposes only, and do not recommend any kind of buy/sell.
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