Top 5 Small Cap Stocks of 2019

Best Indian Small Cap Stocks to Own Heading into 2020

Introduction

Here is a complete list and analysis of Top 5 Small Cap Stocks of 2019 in Indian Share Market. These are the small cap stocks with the best value, fastest growth, and most momentum for 2019.

In our earlier articles, we have analysed Top Large cap stocks and Mid cap stocks of 2019 which have given highest YTD performance for the year 2019.

Top 5 Small Cap Stocks of 2019

In this article, we will see which are these best Small cap stocks of 2019, that have delivered the best YTD performance for 2019. The key reasons behind these high returns are also discussed here.

1. Adani Green Energy Ltd.

• India’s premier renewable power producer, Adani Green Energy Ltd has delivered highest YTD returns of almost 297% in 2019.
• Received letter of Award (LoA) from Solar Energy Corporation of India (SECI) to set up Wind Solar Hybrid power projects  (20^th Jun)
• In H1FY20 (April-September), Adani group won bids for 130 MW wind and 600 MW Hybrid, Total operational capacity 5.29 GW
• Adani Green Energy has acquired of 10 renewable energy projects (30st Aug), in which the company signed an agreement to acquire 205 MW operating solar assets of Essel Group
• In process of implementing 725 MW wind project in Kutch, Gujarat – Statement by Company
• Raised $362.5 Million via dollar bond issuance (4^th Oct) which is proposed to be used for growing Capital Expenditure
• Power purchase agreement (PPA) with Solar Energy Corporation of India for 25 years (20^th Oct) – Strong future earnings visibility

2. CreditAccess Grameen Ltd.

• It is a micro-finance institution providing a wide range of financial services to the rural poor and low-income households
• As per the Corporate Tax Rate Cut Announcement (20^th Sept), the Tax Rate Changed to 25% from 35%. It will result into rise in the profitability of the company, due to higher retained earnings.
• Consistent Buying by DIIs in Q2 FY20, which is a positive sign for the stock.
• CreditAccess Grameen to Acquire Madura MicroFinance (MMFL) with controlling stake 76.2% (27^th Nov). Thus, MMFL platform can act as a future growth driver – wide customer base, distribution footprint, technology
• RBI’s Oct-19 Monetary Policy Meet, RBI has taken measures to increase the credit growth in NBFC and Micro Finance sector. RBI hikes lending limit for NBFC and Microfinance borrowers
  • Rural : Rs.1 L to Rs.1.25 L
  • Urban / Semi urban : Rs.1.6 L to Rs.2 L
• Strong Q2 FY20 Performance :
  • AUM growth = 36% YoY
  • Net Interest Income rise 26%
  • Net Interest Margin (NIM) = 12.1%
  • Improved Asset Quality QoQ & YoY : GNPA = 0.5%

3. Dixon Technologies (India) Ltd.

• Dixon Technologies (India) is primarily engaged in the manufacturing of electronics as its core business activity. It has around 10% market share in Electronic Manufacturing Services (EMS) – LED TVs, LED Bulbs, CCTV, DVRs, Washing Machines
• Strong Market Share across diversified products :
  • Flat Panel Display (FPD) TV > 50%
  • LED Lightening > 35%
  • Washing Machine > 40% in EMS market
• Corporate Tax Rate Cut Announcement (20^th Sept), Tax Rate Changes to 25% from earlier rate
• Consistent Buying by FIIs indicates how positive are the foreign institutional investors are about the company’s future growth potential and higher earnings visibility. Thus there was QoQ rise in FII Stake
  • Mar-19 : 6.04%
  • Jun-19  : 7.23%
  • Sept-19 : 7.67%
• Key Strength : Increasing EMS opportunities and higher share of ODM (Original Design Manufacturing)

4. Astrazeneca Pharma India Ltd.

• A MNC company, Astrazeneca Pharma India is engaged in the business of manufacture, distribution and marketing of pharmaceutical products.
• There is a consistent Rise in FIIs stake in 2019, giving the kind of confident foreign investors are having for the company :
  • Dec-18 : 0.59%
  • Mar-19 : 1.69%
  • Jun-19  : 2.17%
  • Sept-19 : 2.74%
• The company has received Import & Market permission from Drug Controller General of India for the launch of new tablet in India
• CLSA, a Global Investment Group is Bullish on Pharma MNCs because of 3 Reasons :
  1. Focus on power brands and new launches to drive growth
  2. Limited impact of disruptions (Gov’s initiative to promote quality generic drugs at affordable prices)
  3. Nature of Business : Strong Balance sheet, superior return ratios, predictable earnings profile
• Agreement with Sun Pharma for Sale (Promotion & Distribution) of Cancer drugs in China (6^th Nov)

5. Balrampur Chini Mills Ltd.

• The company is engaged in transforming from an integrated sugar manufacturer to a predominantly green energy organisation.
• Buyback offer of 8.44 million equity shares, 3.69% of total equity was made by the company  (16^th Apr). Here, Buyback price was Rs.175 & Market Price at the time of buyback period was Rs.140.
• Strong DII Buying in Q2 FY20 : 4.30% to 6.60%
• Positive Outlook :
  • CRISIL reaffirmed its AA rating on commercial papers of company (18^th Apr)
  • ICRA reaffirm long-term STABLE outlook (25^th Sept)
  • Elara Capital, a UK based Investment Bank, given BUY Rating for Balrampur Chini Mills for long-term
• Technical indicators were BULLISH on the stock in 2019, where Bull candles were backed by healthy volumes & strength in the up move
• Strong Operating Profit Margin (OPM) % in Distillery segment due to higher realisation and volumes of Ethanol in distillery division
  • Government’s announcement of increase in Ethanol prices in FY19
• Expansion of Distillery capacity in Gularia, Utter Pradesh