February 28, 2017

Smallcap Multibagger Ideas for FY 2018

Markets are close to all time highs and the small caps and mid caps space is on a boom! In this article we share some small caps that can give "multibagger" returns:

Note: Raghav Behani is a SEBI registered Research Analyst. The stocks discussed below may or may not be recommended to our clients. To get research backed long term investment ideas, check out out Membership Plans

i) Pincon Spirit:
Market Cap: Rs 294 Crores


Pincon spirit is the flagship company of PSL Group which operates in the following segments:

- IMFL
-IMIL
- Retail Chains
-FMCG

Positives:
- The company has seen a fast growth in sales and profits
- The ratios appear decent for margins and returns
- Valuations are not expensive

Negatives:
- The company has a big pile of debt in it's books and it is constantly rising
- The company is losing cash big time and is unable to convert profits into cash
- The company has low interest coverage ratio
- Low promoter holding

ii) Poddar Pigments:
Market Cap: Rs 270 Crores



Poddar pigments manufactures colours and additive masterbatches. It is the first company in India that manufactures masterbatches for Nylon, Polypropylene and polyester multi filament.

Positives:

- 5 Year growth rate is healthy for sales and PAT figures
- Company has decent ROE
- Very low debt levels

Negatives:

- Short term growth is in single digits
- Margins are falling
- Company enjoys little/NO pricing power

iii) Sukhjit Starch
Market Cap: Rs 207 Crores


The Punjab based starch manufacturer trades at low PE levels. Does it have the potential to give 3x-4x returns?

Positives:

- Low PE, leaves room for PE expansion
- Debt equity ratio is low
- Promoter holding is 60% +

Negatives:

- Company is unable to maintain margins
- ROE is low
- Margins are trending lower

iv) Indo Borax (IBCL):
Market Cap: Rs 85 Crores





This stock is part of our free portfolio. You can look it up here: Past Performance

v) Medi Caps:
Market Cap: Rs 27 Crores





The empty hard gelatin capsule maker could be a good proxy investment for the booming pharma industry in India.

Positives:
- The company has a P/BV ratio of just 0.33
- The company has no debt
- The company can benefit from a booming pharma industry

Negatives:
- Short term growth has hit a bump
- Margins are trending lower
- The company has extremely low ROE


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