Top 5 Multibagger Microcap Stocks of 2023 So Far. Take a Look...

A microcap stock is a publicly traded company that has a market capitalisation which is lower than small, mid, and large-cap stocks.

Investing in microcap stocks can be a daunting task for beginners because of their lack of popularity and the low liquidity.

However, they offer a huge opportunity for investors with some patience and risk tolerance.

Many microcaps are still in the early stages of development, which means that there is plenty of room to grow.

In today's article, we look at five microcap stocks that have rallied the most in 2023 so far. These companies are part of Nifty Microcap 250 index, which distinguishes smallcaps and microcaps.

#1 Jindal Saw

First on the list of multibagger microcap stocks of 2023 is Jindal Saw.

The flagship company of PR Jindal group, Jindal Saw is a leading global manufacturer and supplier of Iron & Steel pipes and pellets.

Shares of the company have been on a roll in 2023, rallying over 200% within 6 months.

What factors contributed to the rally? You could say it's a combination of factors that came together and drove the growth for Jindal Saw.

The first one is quite obvious and you probably figured it out already - strong earnings. Jindal Saw reported strong numbers for the March 2023 quarter with net profit more-than-doubling to Rs 2.9 billion (bn) on the back of healthy operational performance.

Its EBITDA surged 50% while margins improved 148 bps to 11.6%.

If you look at the company's financials for the past couple of years, you'll see that Jindal Saw has been consistent in reporting out of the box numbers. This has been supported by increased sales volume and improved capacity utilizations plus higher realisations.

In its FY23 annual report, the company specifically mentioned that the anti-dumping duty on stainless steel tube imports from China for five years could go a long way in boosting the company's presence in the local market.

It added that the export incentive under RoDTEP Scheme (Remission of Duties and Taxes on Exported Products) may drive exports further.

The company is expected to have a good first quarter so be on the lookout.

To know more, check out Jindal Saw's financial factsheet and its latest quarterly results.

#2 Titagarh Rail Systems

Next on this list is a railway stock - Titagarh Rail Systems.

The company is mainly engaged in the manufacturing and selling of freight wagons, passenger coaches, metro trains, train electricals, steel castings, specialised equipments & bridges, ships, etc.

Shares of the company have rallied 123% in 2023 so far, churning out multibagger returns.

The company's strong order book along with the government's push on expanding rail infrastructure have been the two primary reasons why Titagarh Rail Systems share price is rising.

In May 2022, the company received the single largest order for 24,177 wagons from Indian Railways amounting to Rs 78 billion (bn).

Titagarh receives a large portion of its revenue from the Indian Railways. Yet, its revenue has grown at a meagre 4% over the last three years (CAGR). It has also not delivered any profits during the same period.

The company is aiming to participate in more metro orders over the next year. It is looking to diversify its customer profile, which is dominated by Indian Railways at present.

It continues to get more orders. Recently, the firm bagged an order worth Rs 8.6 bn from Gujarat Metro Rail Corporation for designing, manufacturing, supplying, testing, commissioning and training of 72 Standard Gauge Cars for Surat Metro Rail Phase-I Project I.

The company plans to increase its wagon manufacturing capacity to 12,000 wagons per year in FY24, from 8,400 wagons per year.

To know more, check out Titagarh Wagons financial factsheet and its latest quarterly results.

#3 Datamatics Global

Next on the list is Datamatics Global with a market cap of Rs 38.4 bn.

The company is a global provider of IT, BPM and consulting services. It provides business aligned solutions to a wide range of industry verticals that help enterprises across the world overcome their business challenges and achieve operational efficiencies.

In 2023 so far, shares of the company have rallied over 110%.

The primary reason behind the steep rally in shares is due to a strong Q4 show. At a time when major IT companies are blown away due to multiple fears, this niche IT firm has managed to put on a strong show.

In Q4, the company's revenue surged 33% to Rs 4.2 bn while EBITDA jumped almost 80%. In its history of operations, the company has not surpassed the Rs 4-bn revenue mark. Revenue growth was driven by all three segments.

The company's net profit jumped 30.9% to Rs 597 million (m).

While declaring results, the company's Vice Chairman and CEO Rahul Kanodia mentioned that their deal pipeline continues to remain robust.

For the full year ended March 2023, the company reported revenue of Rs 14.6 bn, up 21.5% while profit was up 20% to Rs 1.9 bn.

To know more, check out its financial factsheet and latest quarterly results.

#4 Kaynes Technology

Fourth on the list is Kaynes Technology.

Kaynes is a leading end-to-end and IoT solutions-enabled integrated electronics manufacturing company. It provides conceptual design, process engineering, integrated manufacturing, and life-cycle support for major players in the automotive, industrial, aerospace and defense, outer-space, nuclear, medical, railways, Internet of Things, and other segments.

In 2023 so far, shares of the company have rallied 112%.

Investors were eagerly waiting for this company's IPO as anything related to defence was gaining attention. As expected, the company received a good response and listed at a 32% premium in November last year.

The current uptrend in the stock could be attributed to the strong Q4 numbers, the defence company reported.

Kaynes posted a 107% year-on-year growth in net profit at Rs 412.8 m. This, on the back of a 53% rise in revenue to Rs 3.6 bn.

In Q4, the company received large orders from industrial and automotive segments. It added new customers in segments like EV, medical, IT, defense, and aerospace.

Kaynes was also a beneficiary of the PLI scheme. The company is getting PLI benefits in telecom and air conditioning & white goods.

The company is currently working on indigenizing the supply chain by collaborating with a bare PCB manufacturer and examining post-FAB outsourced semiconductor assembly and testing. This will give it an entry into the semiconductor space.

Kaynes is also planning to manufacture laptops and sees growth opportunities in the IT hardware component.

For FY24, the company has guided for a revenue of Rs 17 bn which will be led by domestic growth.

To know more, check out Kaynes Technology financial factsheet and its latest quarterly results.

#5 Chennai Petroleum

Last on this list is Chennai Petroleum.

The company is involved in the business of refining crude oil to produce & supply various petroleum products and manufacture and sale of lubricating oil additives.

Formerly known as Madras Refineries, Chennai Petroleum is a subsidiary of Indian Oil Corporation (IOC) which is under the ownership of Ministry of Petroleum and the government of India.

In 2023 so far, shares of the company have rallied 108%.

In 2022, all refinery stocks lost their charm as crude oil prices fell sharply. Weak economic data combined with rising interest rates caused oil prices to slump.

Markets were worried that a recession, along with falling crude oil prices could take a hit on the profit margins of oil companies.

Skip forward to present and these problems seem to have gone away, at least for Chennai Petroleum.

Chennai Petroleum achieved the highest ever throughput of 11.31 tonnes per annum (TPA) in FY23. In addition to this, it achieved the highest ever annual production and dispatch of products.

Recently, the company and IOC entered into a JV for a 9 million tonne refinery in Nagapattinam with 5% petrochemical integration.

It's also acquiring additional land for new refinery proposals.

To know more, check out Chennai Petroleum's financial factsheet and its latest quarterly results.

And to know what's moving the Indian stock markets today, check out the most recent share market updates here.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...