Best Small-Cap Stocks in India in September 2024 – Based on 5yr CAGR

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A stock is classified as a small-cap stock if its market capitalisation is equal to or lower than that of the 251st largest stock on the NSE at the time of investment.  Compared to mid-cap and large-cap stocks, small-cap stocks can be volatile and risky, but they can also present opportunities for rewards due to their potential for rapid growth and innovation. In this article, check the best small-cap stocks in India in September, based on their 5yr CAGR. 

Best Small-Cap Stocks in September 2024 – Based on 5yr CAGR

Note: The best small-cap stocks list provided here is as of September 13, 2024. The stocks are selected from the Nifty Smallcap 100 universe and are sorted as per the 5-yr CAGR.

Overview of the 5 Best Small-Cap Stocks in September 2024

• Tata Teleservices (Maharashtra) Ltd

Tata Teleservices Limited (TTSL) is a major provider of connectivity and communication solutions for enterprise clients. Operating under the brand Tata Tele Business Services (TTBS), it delivers a wide range of ICT services in India, including connectivity, collaboration, cloud, security, and marketing solutions. In FY 2024, the company’s total income was ₹3,324.84 crore, up from ₹3,007.60 crore in FY 2023. The profit for the year ended March 31, 2024, was -₹1,606.38 crore, compared to the loss of ₹1,530.91 crore in FY 2023.

Key metrics:

• Return on Capital Employed (ROCE): -6.31%

• Titagarh Rail Systems Ltd

Titagarh Rail Systems is a leading provider of comprehensive mobility solutions, with a significant presence in both India and Italy. Equipped with advanced factories in each country, the company is dedicated to fulfilling the varied needs of passenger and freight rail systems. In FY 2024, the company’s total income was ₹3,89,310.75 lakh, up from ₹2,82,217.34 lakh in FY 2023. The profit for the year ended March 31, 2024, was ₹28,843.38 lakh, compared to ₹13,463.33 lakh in FY 2023.

Key metrics:

• ROCE: 18.49%
• ROE: 17.99%
• Debt to Equity: 7.47%

• JBM Auto Ltd

JBM Auto Ltd is one of the leading manufacturers of key auto systems, electric vehicles and buses. In FY 2024, the company’s total income was ₹5,029.67 crore, up from ₹3,884.39 crore in FY 2023. The profit for the year ended March 31, 2024, was ₹193.78 crore, increased from ₹125.14 crore in FY 2023.

Key metrics:

• ROCE: 21.66%
• ROE: 16.09%
• Debt to Equity: 178.42%

• Bls International Services Ltd

BLS International Services Limited (BLS) is a globally trusted and highly esteemed tech-enabled service partner for governments and citizens. The company has established itself as one of the top 2 players in the field of visa, passport, consular, and citizen services. In FY 2024, the company’s total income was ₹1,71,676.28 lakh, up from ₹1,53,743.65 lakh in FY 2023. The profit for the year ended March 31, 2024, was ₹32,562.21 lakh, increased from ₹20,426.58 lakh in FY 2023.

Key metrics:

• ROCE: 24.44%
• ROE: 27.47%
• Debt to Equity: 2.12%

• Apar Industries Ltd

Apar Industries manufactures and supplies conductors, a wide variety of cables, speciality oils, polymers, and lubricants. In FY 2024, the company’s total income was ₹16,239.41 crore, up from ₹14,373.77 crore in FY 2023. The profit for the year ended March 31, 2024, was ₹825.11 crore, up from ₹637.72 crore in FY 2023.

Key metrics:

• ROCE: 35.77%
• ROE: 27%
• Debt to Equity: 12.27%

Benefits of Investing in the Small-Cap Stocks 

• Growth Potential: Compared to mid-cap and large-cap companies, small-cap companies can have significant room for expansion and growth. As these companies grow, they can offer substantial returns compared to larger, more established firms.
• Greater Flexibility: Small-cap companies typically have more agile business models and can adapt quickly to changes in market conditions or consumer preferences, potentially leading to faster growth.
• Early Investment Opportunities: Investing in small-cap stocks can provide early access to emerging businesses with innovative products or services, potentially leading to significant long-term gains.
• Potential for Acquisition: Small-cap companies are often targets for acquisition by larger firms, which can result in a premium for shareholders if the company is bought out.

Risks of Investing in the Small-Cap Stocks 

• Volatility: Small-cap stocks are generally more volatile than large-cap stocks. Their prices can fluctuate significantly, which can lead to risks.
• Limited Liquidity: These stocks may have lower trading volumes, making them less liquid. This can lead to larger price swings and difficulty in buying or selling shares without impacting the price.
• Less Financial Stability: Small-cap companies often have less financial stability and resources compared to their larger counterparts. They may be more vulnerable to economic downturns or financial difficulties.
• Risk of Failure: Smaller companies may face risks of business failure or financial distress, which can result in substantial losses for investors.

Conclusion

Conducting thorough research and maintaining a diversified portfolio are essential strategies if you are looking to capitalise on the growth potential of small-cap stocks in India. Talk to your financial advisor before making a decision. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.