Best Smallcap Stocks for 2024: List of Top Small Cap Investment Shares to Buy in India (2024)

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Stocks in the stock market are often classified based on their market capitalisation as largecap,midcap, andsmallcapstocks. This categorisation helps investors make informed investment decisions.

Smallcapstocks are often a popular investment choice for those seeking higher returns, as they are stocks of small companies with market capitalization generally ranging between Rs. 500 crores and Rs. 5,000 crores.Smallcapstocks are different from large-cap stocks as they have a higher potential for growth, which may offer better returns in the long run.In this blog, we will look atwhatsmallcapstocks are, asmall capshare list of the bestsmall capstocksIndiafor 2024, their advantages and risks, and how to invest in them.

BestSmallcapStocks of 2024

Discover promising investment opportunities with our carefully curated top small cap stocks list for 2024 below. This small cap stocks list is meant for educational purposes only.

Disclaimer: Please note that the above list is for educational purposes only, and is not recommendatory. Please do your own research or consult your financial advisor before investing.

Note: The data in this small cap share list, including the smallcap share price, is from 22nd May 2024. This data is derived from Tickertape Stock Screener.

🚀 Pro Tip: You can use Tickertape’s Stock Screener to research and evaluate stocks with over 200+ filters and parameters.

Small Cap Stocks in India: An Overview

Let’s have a look at the list of small cap companies and top small stocks to buy in detail. Here is a brief overview of all the best small cap shares to buy now that had been listed above:

Aptus Value Housing Finance India Ltd

Aptus Value Housing Finance India Limited, established on December 11, 2009, is one of the best small cap stocks for 2024 on our list. It aims to fulfil the long-term housing finance requirements of the low and middle-income demographic. The company specialises in providing loans for non-housing finance through Loan Against Properties (LAP). As of 22nd May 2024, the company market capitalisation is Rs. 14,850.47. This small-cap stock has experienced a revenue growth of 40.85% at a yearly rate, over the past 5 years. Furthermore, the company’s market share increased from 0.15% to 0.54% over the past 5 years.

CE Info Systems Ltd

C.E. Info Systems Limited, originally named ‘C.E. Info Systems Private Limited,’ was incorporated in New Delhi on February 17, 1995, as a Private Limited Company. The company specialises in data and technology products and platforms, providing proprietary digital maps through services like Maps as a Service (MaaS), Software as a Service (SaaS), and Platform as a Service (PaaS). With a market cap of Rs. 10,817 cr., this company has an impressive 5-yr net profit margin of 42.53% as of 22nd May 2024. Over the last 5 years, net income has grown at a yearly rate of 24.81%, vs industry avg of 15.64%

Easy Trip Planners Ltd

Easy Trip Planners Limited is the second-largest online travel agency in India, the company provides a comprehensive array of travel products and services for end-to-end travel solutions, including airline tickets, hotels and holiday packages. With a market cap of Rs. 7,850.14 cr., this company has a 5-yr net profit margin of 29.17% as of 22nd May 2024. The company’s revenue has grown significantly, with a yearly growth rate of 27.73%, as compared to the industry average of -19.26%. Furthermore, the company’s market share has increased from 0.55% to 6.1%, over the past 5 years.

Aether Industries Ltd

Aether Industries Limited is an India-based specialty chemical manufacturing company. The company is focused on producing advanced intermediates and specialty chemicals involving complex and differentiated chemistry and technology core competencies. As of 22nd May 2024, the company’s AUM is Rs. 11,116 cr. and the 5-yr net profit margin is 42.53%. The company’s current ratio has increased from 171.56% to 253.06% over the last five years.

Happiest Minds Technologies Ltd

Happiest Minds Technologies is a digital transformation IT consulting & services company focused on big data, analytics cloud, mobility and security services. The stock’s revenue has grown at a yearly rate of 25.81% over the last 5 years. Furthermore, the company’s market share has also increased from 0.11% to 0.2%. According to the cash flow growth, free cash flow growth has been 220.62% vs industry avg of 14.49%.

Kfin Technologies Ltd

Kfin Technologies Ltd offers software-as-a-service (SaaS) solutions, providing end-to-end transaction management, channel management, compliance services, data analytics, and a range of other digital offerings to asset managers across different segments. The company also provides outsourcing services. As of 22nd May 2024, the company’s AUM is Rs. 12,749.15 cr. and the 5-yr net profit margin is 13.16%. The company’s current ratio is 219.35%.

Mastek Ltd

Mastek Limited is an IT solutions provider. The company’s portfolio includes business and technology services, which consists of IT consulting, application development, systems integration, data warehousing, application security and CRM services. As of 22nd May 2024, the company’s AUM is Rs. 7,660.65 cr. and the 5-yr net profit margin is 11.18%. The company’s revenue has grown at a yearly rate of 25.83% over the past 5 years. Furthermore, this small cap company list’s market share has also increased from 0.21% to 0.36%.

Indigo Paints Ltd

Indigo Paints, an Indian paint manufacturer, offers a diverse range of products including interior emulsions, exterior emulsions, enamels, putties, primers, wood coatings, ceiling coats, roof coats, and floor coats. As of 22nd May 2024, the company’s AUM is Rs. 6,781.70 cr. and the 5-yr net profit margin is 8.75%. This small-cap stock has experienced a revenue growth of 21.36% at a yearly rate, over the past 5 years. Additionally, the company’s market has also increased from 1.49% to 1.95% over the past 5 years.

Praj Industries Ltd

Praj Industries Limited is one of the Indian small cap stocks engaged in the business of process and project engineering. This small cap stock has a market capitalisation of Rs. 9,652.94 cr. and the 5-yr av net profit margin is 6.23% as of 22nd May 2024. The company’s revenue has grown at a yearly rate of 30.53% over the past 5 years. Furthermore, the company’s market share has increased from 0.33% to 0.92%, over the past 5 years.

Sonata Software Ltd

Sonata Software Limited is an information technology (IT) services and solutions company. The market capitalisation of the best small cap stock for long term is Rs. 9,652.94 and the 5-yr avg net profit margin is 5.83% as of 22nd May 2024. The company’s market share increased from 0.61% to 1.02% over the last 5 years. Due to the net income growth of 18.61% yearly rate, Sonata Software Ltd is considered one of the best small cap IT companies in India.

Investing in Small Cap Stocks via smallcase

One can buy smallcap stocks individually or buy mutual funds or exchange-traded funds (ETFs) that invest in the best small cap stocks in India. You can also easily invest in smallcap smallcase stock lists through professionally managed portfolios.

Let’s learn about smallcase.

smallcases are modern investment products that help investors build low-cost, long-term & diversified portfolios with ease. A smallcase is a basket or portfolio of stocks/ETFs representing an idea – an objective, theme, or strategy. They are created and managed by SEBI-registered experts.

Among 500+ smallcases, here’s are some of the top small-cap stocks smallcases:

Mi25 Smallcap smallcase by Weekend Investing

Wright 🌱 Smallcaps smallcase by Wright Research

Disclosures for Mi25 Smallcap smallcase

Disclosures for Wright 🌱 Smallcaps smallcase

What are Small cap stocks?

Smallcap stocks are stocks of smallcap companies. In India, smallcap companies have a lower cap of less than Rs. 5,000 crores.

Smallcap stocks comprise up-and-coming young companies that are growing fast and are traded both on the BSE and the NSE. These companies have high growth potential, making them attractive investments for many investors.

Smallcap stocks are tracked by the small caps index, which comprises the best small cap companies in India listed on the National Stock Exchange (NSE) with a market capitalisation between Rs. 500 crores and Rs. 5,000 crores. The index provides a good representation of the smallcap segment of the Indian stock market.

Why Invest inSmallcapStocks?

Now that we have discussed what aresmall-capstocks in India, it’s crucial to understand how we should invest. Investing in the topsmall capstocks to buy India presents a distinctive avenue within the financial landscape. These stocks, representingsmall capcompanies in India with smaller market capitalisations, offer unique opportunities and characteristics.

• Growth Potential:The bestsmall capstocks are known for their potential for rapid growth.Thesetopsmall capcompaniesin Indiaoften operate in burgeoning industries and can experience significant expansion, allowing investors to capitalise on early-stage success.
• Market Inefficiencies:Thesmall-capmarketis lessscrutinised than its larger counterparts, creating potential inefficiencies.Investors skilled at identifying undervalued gems in this space may benefit from pricing discrepancies that can arise due to lower visibility.
• Diversification:Including the topsmall capstocks to buy India in a well-rounded portfolio can enhance diversification.Their performance is less correlated with large-cap stocks, providing a buffer during market fluctuations.
• Innovation and Agility:Smaller companies are often more nimble and innovative. Their ability to adapt swiftly to changing market dynamics can result in a competitive edge, fostering resilience and growth.

As always, investors must conducttheir ownresearchand/orconsult their financial advisor before investing.

How to Invest in Small Cap Stocks for Long Term?

Investing in the best small cap stocks for long term investment requires thorough research and analysis. The following are steps to consider when investing in the top small cap stocks to buy India:

• Research NSE small cap stocks and find potential investments. Investors can use tools like stock screeners to filter stocks by market capitalisation. The CNX Smallcap Index comprises 100 tradable, exchange listed small cap companies.
• BSE also introduced a new index called ‘BSE Small-Cap’ index to track the performance of small cap companies in India with relatively smaller market capitalization.

Analysing financial statements and company performance. Investors should analyse financial statements (such as balance sheets) to determine the financial health of the list of small cap stocks. This can include analysing revenue growth, earnings growth, and debt levels.

Who Should Invest in Small Cap Shares?

Investors with a high-risk appetite who want to invest in underpriced and under-recognised businesses and earn organically high returns (these returns are not influenced by larger financial institutions). Investors can get quality stocks at a fair price when they invest in small cap shares.

As always, any investor must conduct thorough research and/or consult their financial advisor before investing.

How to Identify the Best Smallcap Stocks?

Identifying the best small cap stocks requires a nuanced approach that balances risk and potential reward. Here are key considerations:

• Company Fundamentals: Scrutinise financial health, revenue growth, and earnings consistency. Look for companies with a solid business model and a competitive edge in their industry.
• Management Team: Assess the leadership’s track record and experience. Competent and visionary management is often a positive indicator for long-term success.
• Market Trends: Analyse industry trends and the company’s position within its market. A small-cap stock with room for growth in a thriving sector may offer promising opportunities.
• Financial Ratios: Evaluate key financial ratios such as price-to-earnings (P/E), debt-to-equity (D/E), and return on equity (ROE). These metrics provide insights into a company’s financial health and valuation.
• Liquidity: Consider the stock’s liquidity to ensure easy buying and selling. Low liquidity can lead to higher volatility and challenges in executing trades.
• Macroeconomic Factors: Be mindful of broader economic conditions. Small stocks to buy can be sensitive to economic shifts, so understanding macro trends is crucial.
• Research and Analysis: Regularly conduct thorough research and stay updated on the company’s performance, industry trends, and any relevant news.

Factors to Consider While Investing in Smallcap Stocks

Investing in the best small cap stocks to invest in 2024 can be rewarding, but it comes with inherent risks. Understanding key factors is crucial before diving in:

• Risk Tolerance: Small stocks to buy are known for higher volatility. Assess your risk tolerance carefully and align it with the potential fluctuations in these stocks.
• Research and Due Diligence: Thoroughly research the best small cap stocks company’s financial health, management, and growth prospects. Even the best small cap stocks for 2024 often lack analyst coverage, making individual research imperative.
• Market Conditions: Investing in small share to buy that are more susceptible to economic shifts. Consider the prevailing market conditions and how they may impact smaller companies.
• Liquidity: Due to lower trading volumes, small listed companies in India may face liquidity challenges. Assess the ease of buying or selling shares without significant price impact.
• Long-Term Perspective: Small cap investing may take time to mature. Having a long-term perspective allows you to ride out short-term fluctuations and benefit from potential growth.
• Diversification: Avoid concentrating your portfolio in small cap stocks with huge growth potential alone. Diversification spreads risk across different asset classes.
• Company Fundamentals: Focus on companies with strong fundamentals. Analyze earnings, debt levels, and competitive positioning of the best small cap share for long term to gauge stability.

What are the Features of the Best Small Cap Stocks?

When evaluating the top small cap company, there are several key attributes one should keep in mind before investing in the best small cap stock. Some of them have been listed below:

• Highly Volatile: The stocks of these small cap companies in India are volatile since there is uncertainty about them becoming successful in the future.
• High Returns: Smallcap stocks can potentially typically yield high returns for any investors, especially in the shorter run.
• Low Liquidity: Top small cap stocks to buy India have the least liquidity, making squaring off positions more difficult.

Risks Associated with Small Cap Stocks

• Higher Risk: Small cap Indian companies are more likely to experience financial difficulties and may have less access to capital than larger companies.
• Limited Liquidity: The best small cap stocks may have limited trading volume, making it difficult to sell shares quickly.
• Greater Volatility: Even the small-cap stocks with huge growth potential may experience greater price fluctuations than large cap stocks.

Advantages of Investing in the Best Long Term Small Cap Stocks for Long Term

• Higher Returns: Indian small cap stocks for 2024 India have the potential to provide higher returns than large cap stocks.
• Growth Potential: Small cap companies in India have the potential to grow at a faster rate than larger companies.
• Diversification: Investing in the best small cap stocks can provide diversification benefits for a portfolio.

Compared to the small cap best stocks of larger, more established firms, small stocks to buy are riskier and more volatile, therefore investors should be extra cautious while conducting their research before making any investment decisions.

Is Smallcap Stock a Good Investment?

Investments in small stocks to buy may be profitable. If an investor buys them at a good price and they have a growth potential that is greater than that of large-cap stocks or blue-chip businesses, they may experience a strong return.

To Wrap It Up…

Investing in smallcap stocks can be a good way to diversify your portfolio and potentially achieve higher returns. However, it is important to do your research and analysis before investing in any stock, including smallcap stocks.

In conclusion, smallcap stocks are a segment of the Indian stock market that comprises small-cap companies with high growth potential. Investing in smallcap stocks can diversify an investor’s portfolio and potentially higher returns. However, smallcap stocks also carry higher risks, and it is important for investors to conduct thorough research and analysis before investing in them.

Frequently Asked Questions on Smallcap Stocks