With strong earnings growth, investors are finding out which small-cap stocks they should make their next investment in.
In today’s article, we take a look at five small-cap stocks that posted strong growth in their September 2022 earnings.
let’s get started…
#1 Best Agrolife
First on the list is Best Agrolife, a pesticide and agrochemicals company.
Formerly known as Sahyog Multibase, the company is a leading agrochemical manufacturer in India and is among the top 15 agrochemical companies in the country.
It is one of the fastest growing manufacturers of technical, formulation, intermediates and public health products.
In the most recent quarter ending September 2022, the company reported a five-fold increase in its net profit 1.3 billion (BN).
This comes on the back of strong revenue, which more than doubled 7 billion in the quarter under review on a year-on-year basis.
The company posted a strong performance in the second quarter as its plants achieved higher capacity utilisation. In the June 2022 quarter as well, the company had reported a robust 55% growth in net profit driven by better sales.
Best Agrolife has 30,000+ Metric Tonnes Per Annum (MTPA) manufacturing capacity and 7,000+ MTPA integrated state-of-the-art technological plant.
India’s top investment gurus have not shied away from endorsing this company. Ashish Kacholia holds more than 1% stake in Best Agrolife.
The strong results, along with other factors, have pushed the company’s shares closer to their yearly highs.
#2 Siyaram Silk
Next on the list is Siyaram Silk Mills, a textile manufacturing company. It is exclusively engaged in the manufacturing of garments and readymade garments in the men’s wear segment.
The company has a diverse fabric range consisting of all blends such as polyester viscose, polyester wool, 100% cotton, cotton blends and linen. The main brands in the fabric division are Siyaram, Mystère, Featherz, Cadini and J Hampstead.
In the September 2022 quarter, Siyaram Silk reported a 51% increase in its consolidated net profit on the back of improved operational performance and marketing initiatives.
net profit on compared to 801 million (M) 529 meters in the year-ago period and 308m reported in the June 2022 quarter.
Revenue for the quarter under review was higher by 32% on a year-on-year basis. Its fabric and apparel division posted strong growth in the second quarter.
The company’s presence across all value chains along with manufacturing capabilities has enabled it to adapt to market dynamics and manage fixed costs.
The stock’s performance has been rangebound so far in 2022, but has seen a rally post the announcement of quarterly results.
#3 Shriram Piston
Next on the list is Shriram Pistons & Rings. The company is primarily engaged in the manufacturing of Pistons, Piston Pins, Piston Rings and Engine Valves for various automotive companies in the domestic and export markets.
In the September 2022 quarter, the auto subsidiary reported a 56% increase in net profit. net profit on 730 m as compared to 467 m in the year-ago period. Strong growth in net profit sequentially as well 547 m in June 2022.
The increase was due to a doubling of other income and a 22% increase in revenue.
The company has registered consistent growth in revenue and profit for the last four quarters. This has come on the back of a pick-up in demand for domestic commercial vehicles (CVs) and healthy exports.
As it has an established market position, the company is set for a growth trajectory at least for the near term as it is already seeing increased production volumes.
The shift to electric vehicles (EVs) is a threat that still remains for Shriram Pistons. To counter this, the company is focusing on increasing its share of revenue from CV and off-the-road segments.
The shares of the company have given good performance in 2022 so far. They are trading near the 52-week high.
#4 Alicon Castloy
At the fourth position in the list is Elicon Castalloy, an auto-ancillary company in the smallcap sector. It has a presence in 18 countries and is part of the Alicon Group.
The company manufactures aluminum castings for the auto industry including cylinder heads, support brackets, intake manifolds, crankshafts and engine brackets.
For the September 2022 quarter, the company reported over five times growth in its net profit 153.4 m. it was compared 30m in the year-ago period 108 m in the June 2022 quarter.
Revenue grew 41% while margin also beat estimates.
The company will continue to do well as EV sales grow as it has a diversified revenue stream and strong orders in its kitty. In the past year, orders from Dena Corporation and Ather Energy were the main drivers behind Elicon’s growth.
Recently, the company won a multi-million dollar order from Jaguar Land Rover (JLR) in the United Kingdom for a period of five years to supply a key product called axle housing for its e-mobility platform.
This is its largest order for a single product from a single customer.
So far in 2022, the company’s shares have gained 28%.
#5 International Conveyor
Last on the list at the International Conveyor.
The company is engaged in manufacturing and marketing of solid woven Polyvinyl Chloride (PVC) covered Conveyor Belts. These belts are fire retardant, antistatic, and are mainly used in underground mines for transportation of minerals.
The company operates in a niche segment and its growth has been linked to the development of underground mining operations. Coal India is its major client.
For the September 2022 quarter, the company reports over ten times growth in its net profit 72.2 m. compared to net profit of 7.2m in the year-ago period.
Revenue increased by 28% 660 m as compared to 515 meters were reported in September 2021.
The company announced the buyback in September this year which will open on 3 November 2022 and end on 3 May 2023. The buyback size is 297 meters and the price band has been fixed at Rs 75.
So far in 2022, shares of International Conveyor are down 17%.
Other smallcap stocks put up a strong Q2 performance
Apart from the above, here are other smallcap stocks which delivered strong results in Q2.
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Since smallcap stocks interest you, check out Equitymaster indian stock screener Which has a separate section on smallcaps.
Disclaimer: This article is for information purposes only. This is not a stock recommendation and should not be treated as such.
This article is syndicated equitymaster.com
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