• OUTLOOK ARENA
  • JUNE 15, 2022

Top 5 Smallcap Gainers in 2022

Top 5 Smallcap Gainers in 2022

If you intend to invest for the long term and are willing to take a considerable risk, you should absolutely keep a watch on smallcaps.

History has shown that small-cap stocks have delivered more than 100x returns to investors.

Take the example of Bajaj Finance, Deepak Nitrite or Astral. All these companies were smallcaps a decade ago. Today, they are market leaders in their segment and have provided multibaggers returns over the years.

Doesn't this make your case of investing in smallcaps easier? We're sure it does...

So far in 2022, the BSE smallcap index has fallen 19%. However, there are firms that have survived and come out on top.

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Even as the Indian share market is falling and taking down most stocks, some smallcaps have emerged as big gainers.

Here is a list of the top five smallcap gainers in 2022.

#1 Chennai Petroleum Corporation

The first on the list is Chennai Petroleum Corporation Limited (CPCL).

The stock has gained 266% during the year 2022 so far.

CPCL is a downstream petroleum company that manufactures a variety of value-added petroleum products.

In 1965, the Government of India (GOI), AMOCO, and the National Iranian Oil Company (NIOC) created a joint venture and named it Madras Refinery, now known as Chennai Petroleum Corporation Limited.

CPCL is a subsidiary of Indian Oil, which owns 51.95% of the corporation. Indian Oil is aggressively pursuing new projects that would result in an increase in refining capacity of more than 25 million metric tonnes per year (MMTPA), including CPCL (Chennai Petroleum Corp), and an investment commitment of up to US$1 tn in the next 4 to 5 years.

In the last 3 years, CPCL has reported a weak revenue CAGR of -11.6%.

For the March 2022 quarter, net revenue jumped 42% year-on-year (YoY) to Rs 20.9 bn from Rs 14.7 bn in the previous year's quarter.

The company reported a four-fold jump in its net profit at Rs 9.9 bn against Rs 2.3 bn reported in the same quarter the last year.

The company has announced a dividend of Rs 2 per share for the financial year 2022. This amounts to a dividend yield of 0.57% at the current share price of Rs 349.

To know more about the company check out the company fact sheet and quarterly results.

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#2 Mangalore Refinery and Petrochemicals

The second stock on the list is Mangalore Refinery and Petrochemicals (MRPL).

So far in 2022, the company's share price has zoomed 175%.

MRPL is a branch of Oil and Natural Gas Corporation (ONGC), which is owned by the Government of India's Ministry of Petroleum and Natural Gas.

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The company has a current capacity of 15 million metric tonnes per year and is India's first refinery with two hydrocrackers generating premium diesel (high Cetane).

In the last 3 years, the company's revenue has grown at a CAGR of 3%, while the profit has grown at a CAGR of 105%.

In its latest quarterly results, MRPL's revenue went up by 36.2% YoY and came in at Rs 282 bn.

The company reported a net profit of Rs 30 bn, which was 837% higher compared to the last year which stood at Rs 3.2 bn.

This progress is due to a variety of factors such as increased crude output, improved gross refining margins, and so forth. MRPL implemented a number of steps to boost its local and export earnings.

In addition, the firm has been able to increase its operational performance. It was able to reach capacity utilisation of 100.2% in fiscal 2021-22, up from 76.7% the previous year.

To know more about the company, check out MRPL's factsheet and its latest quarterly results.

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#3 Bharat Dynamics

Third on our list is Bharat Dynamics, a leading manufacturer of guided weapon systems for the Indian defense industry.

The company shares have given close to 110% returns in 2022 so far.

The company makes guided missiles and other defense systems for the Indian military. It also provides product life cycle support and vintage missile refurbishing.

The product portfolio of Bharat Dynamics comprises indigenously produced missiles, undersea weapons, surface-to-air missiles, anti-tank guided missiles, and heavy and lightweight torpedoes.

In last 3 years, the company has recorded a loss in revenue of 25.2% on a CAGR basis. Profit also shows a loss of about 21% in CAGR terms.

The company is developing a strong foundation in the defense business.

It signed a memorandum of understanding (MoU) with the Tawazun Economic Council, the UAE armed forces' security purchase body, to investigate prospects in military products.

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Currently, the firm has four cutting-edge production plants in India. It is also establishing another factory in Maharashtra to meet rising demand.

In its latest quarterly result, the company recorded a 21% increased revenue of Rs 1.3 bn which stood at Rs 1.1 bn a year ago in the same period.

The net profit of the company shows no significant growth and stands at Rs 264 m is March 2022 quarter.

As the prospect of defence stocks has improved due to multiple factors, a majority of defence stocks are trading higher this year. Bharat Dynamics has continued the trend.

To know more about the company, check out Bharat dynamics company fact sheet and quarterly results.

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#4 Sharda Cropchem

The fourth company on our list is Sharda Cropchem.

Shares of the company have given returns of 107% in 2022 so far.

Sharda Cropchem is a rapidly expanding worldwide agrochemicals firm with a low-asset business plan. In more than 80 countries, the firm markets and distributes a diverse variety of formulations and generic active components.

Its product range in the agrochemical business consists of formulations and generic active ingredients in the fungicide, herbicide, and insecticide divisions for crop protection.

Belts, general chemicals, dyes, and dye intermediates form the company's product portfolio in the non-agrochemical industry, allowing it to meet a wide range of customers.

In the last 3 years, the company's revenue on CAGR basis has grown at 12% while profit has grown by 6.3%

According to management, capex in 2024 is estimated to be between Rs 3.8 bn and Rs 4 bn given the company's focus on registrations, increasing proportion of high-margin items, and deeper market penetration.

In its latest quarterly result, the company's revenue increased by 32% to Rs 14 bn which stood at Rs 10 bn a year ago.

Net profit increased by 45% to Rs 2.9 bn which stood at Rs 2 bn a year ago.

To know more about the company, check out SHARDA CROPCHEM company fact sheet and quarterly results.

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#5 Vadilal Industries

The fifth stock on our list is Vadilal Industries.

The stock has surged 106% in 2022 so far.

Vadilal Industries is one of India's leading ice cream brands. It is manufacturer of ice cream and flavoring milk. It became 115 years old in April 2022.

In addition to a grocery presence, Vadilal has a retail presence through its Happinnezz ice-cream parlor network, which is operated under a franchisee arrangement.

Amid all the hassle of pandemic and disturbance in supply chain due to global crisis, Vadilal came out successfully giving its investors sweet gains.

In last 3 years, the company has reported a weak revenue CAGR of -5.4% and net profit CAGR of -33.4%.

Vadilal's revenue is expected to rise as a result of reduced lockdown restrictions, new marketing methods, and record-breaking high temperatures.

In its latest quarterly result, the company reported an increase in revenue by 31% to Rs 2.1 bn which stood at Rs 1.6 bn in the previous year's quarter.

The net profit increased by 43% to Rs 399 m from Rs 279 m a year ago.

To know more about the company see the Vadilal Industries company fact sheet and quarterly results.

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Conclusion

Investing in the stock market has become difficult at the moment. Investor and traders are worried given the added volatility and concerns.

In the midst of hardship, however, there is always an opportunity. An investor must hunt for the best timing to invest in a certain stock.

These smallcap firms have managed to provide investors with multibagger returns even when the markets went tumbling.

So look out for opportunity in this crisis. You can concentrate on the following areas for the time being:

The petroleum industry is thriving. There are several causes for this. One of the primary causes is the aftermath of the Russian-Ukraine War, which has resulted in fluctuating crude prices.

The defence industry, as the Indian government strives to have more strategies for national defence.

The demand for items that drive the economy has surged in the post-pandemic period. Goods that aid in the development of the country's infrastructure are in high demand. As a result, these firms' share prices will remain strong for the near future.

Despite the fact that these extremely turbulent patterns are leaving investors and experts scratching their heads, it is critical to exercise caution while picking stocks.

Be extra cautious and practice Howard Marks' second order thinking...it will surely minimize the risks involved.

Happy Investing!

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