Top 5 Small Cap Stocks with Highest MF Holding

Top Small Cap Stocks which has maximum DII holdings (Feb 2019 data)

Introduction

Small Cap Stocks are a becoming very popular among Mutual Funds. Small Cap Category of Mutual Funds has increasing AUMs as they have given some exceptional returns in the past. Which are the stocks which Mutual Funds love in Small cap space?

SEBI has done the new categorization of stocks into large cap, mid-cap and small cap. The stocks from 250 onwards as per the market capitalisation are the small cap stocks. From these companies ranking from 250 onwards, which are the top 5 small cap companies in which mutual funds have invested the maximum amount of money?

It is not necessary that only small cap mutual funds should invest in the small cap stocks. As we will see in the further analysis, along with small cap funds, many mid cap, multi cap and even hybrid funds have invested in these small cap companies. Now, Which are those top mutual funds which have invested in these small cap stocks? This is exactly what we will be studying today.

Top 5 Small Cap Stocks with HIGHEST MF HOLDING

1. CARBORUNDUM UNIVERSAL LTD

• Popularly known as CUMI, It is engaged in manufacturing of coated and bonded abrasives, super refractories, electrominerals, industrial ceramics and ceramic fibres in India. Incorporated in 1954, the company was formed as a collaboration between Murugappa Group, Carborundum Inc, USA, and the Universal Grinding Wheel Co of the UK.
• Business- Abrasives, Ceramics, Electro minerals
• CUMI has earned a place in Forbes’ list of ‘Asia’s Best 200 Companies Under a Billion’.
• Key Financial of the company:

1. PE Ratio = 27
2. 5 Year Net Profit Growth = 19%
3. Promoter Holding = 42.39%
4. Debt to Equity Ratio = 0.08
5. ROCE = 20.44%
6. ROE = 14.64%

Due to the slow down in the business in last 1-2 years, trailing profits are not upto the expectation, Therefore, the Net Profit Growth for last 5 years is only 19%. Although having a capital intensive business, ROCE is very good, indicating a positive sign for the company.

2. NCC Ltd.

• Earlier known as Nagarjuna Construction Company, NCC Ltd. incorporated in 1990 is engaged in development of real estate. NCC projects stand on credentials of its work in various sectors such as Housing, Transportation, Power, water, Metals and Oil and gas. The company was listed in 1992.
• Key Financial of the company:

1. PE Ratio = 13.8
2. Net Profit Growth for TTM = 200%
3. ROE = 15.86%
4. Promoter Holding = 18%
5. Promoter Pledged Shares = 42% (of 18%)

Trailing 12 months were phenomenal for the company, since Net Profit Growth for TTM is 200%.

3. KEC International ltd.

• It is the flagship company in the transmission sector of the RPG Group. It is a global leader in the power transmission engineering, procurement and construction (EPC) business.
• KEC supplies towers and constructs transmission lines for the power transmission and distribution industry. It is India’s 2nd largest manufacturer of electric power transmission towers.
• Key Financial of the company:

1. PE Ratio = 15.61
2. ROCE = 27%
3. ROE = 25%
4. Promoter Holding = 51.28%

All the three HDFC’s funds- HDFC mid-cap opportunities, HDFC hybrid equity fund and HDFC small cap funds are manged by the fund manager- Mr. Chirag Setalvad. It indicates the credibiilty and comfortability with the stock which a fund manager is looking for.

4. Equitas Holdings Ltd.

• The company founded in 2007. It is a Non-Deposit Taking Systemically Important – Core Investment Company – (CIS-ND-SI) registered with The Reserve Bank of India.
• The activity of the company is to making investment in subsidiary companies and providing loans to them. It has no other operations.
• Key Financials of the company are:

1. PE = 25%
2. Promoter Holding = 0%

Last 12 months were quite good. The company has a very good presence in South India.

5. Engineers india ltd.

• EIL is engaged in the business of providing engineering and related technical services for petroleum refinaries and other industrial projects.
• EIL has emerged as Asia’s leading design and engineering company that offers complete range of project services. 
• Ket Financials of the comapny are:

1. PE Ratio = 20.70
2. ROCE = 22.5%
3. ROE = 15%
4. Govt Holding = 52%

Although a capital intensive company, ROCE is 22.5% which is very good sign. It indicates the profitability which the company is generating from its core business.