What Are Micro Cap Stocks?
Microcap stocks are companies where themarket capitalization is between INR 500 Cr and INR 2,000 Cr. These stocks belong to small, often new businesses listed on the NSE and BSE. Microcap stocks can proliferate because these companies may be just starting or working in specialized markets.
However, they also carry higher risks, such as low liquidity and price swings. Investors should be careful and thoroughly research before investing in micro-cap stocks, as their values can change rapidly.
Finding multibagger stocks is important for building wealth. Discover potential multibaggers atSovrenn Discovery
Fundamentally Strong Micro Cap Stocks
1- Phantom Digital Effects Ltd
Sector: Phantom Digital Effects Ltd started in 2016. We create visual effects for films, web series, and commercials.
Market Cap: ₹ 513 Cr.
2- Salzer Electronics Ltd.
Sector: Salzer Electronics Limited provides complete and customized electrical solutions.
Market Cap: ₹ 1,791 Cr.
3- Vintage Coffee & Beverages Ltd
Sector: Vantage Coffee and Beverages Ltd was founded in 1980. The company makes and exports instant coffee and chicory.
Market Cap: ₹ 1,443 Cr.
4- Ksolves India Ltd
Sector: Ksolves India Ltd was founded in 2014. The company develops software, offers enterprise solutions, and provides IT consulting to businesses in various sectors, including real estate, e-commerce, finance, telecom, and healthcare.
Market Cap: ₹ 1,220 Cr.
5- Cellecor Gadgets Ltd
Sector: Cellecor Gadgets Ltd started in 2020 and sells consumer electronics.
Market Cap: ₹ 1,097 Cr.
Investing has built huge wealth for several HNI investors. Learn investing FREE OF CHARGE at Sovrenn Education
Is there a Microcap Index in India?
Yes, we have the NIFTY Microcap 250 Index. This tracks the fundamentally strong micro cap stocks listed on the NSE. The index includes the top 250 companies beyond the Nifty 500 index constituents.
A stock’s weight is based on its free-float market capitalization. Sectoral distribution of the Index as of Jan 2024 include Capital Goods at 21.3%, Financial Services at 12.6%, Healthcare at 7.4%,Construction at 7.1%, Chemicals at 6.8%, amongst others.
How to Invest in Nifty Microcap 250 index?
One can invest in the NIFTY Microcap 250 Index through India’s first Microcap Fund -Motilal Oswal Nifty Microcap 250 Index Fund. It is a Passive Fund which replicates the returns of the Microcap Index.
As of Dec 2023, its Asset Under Management or AUM stood at INR 620 Cr. It has an expense ratio of 0.35%. This Index is considered suitable for investors who want to have a long- term wealth creation view.
As of Jan 2024, its top 10 constituents are Ramkrishna Forgings (1.3%), Titagarh Wagons (1.3%), Karnataka Bank (1.3%), Himadri Speciality Chemical (1.3%), Religare Enterprises (1.2%), Jaiprakash Power (1.2%), Reliance Power (1.2%), Ujjivan Financial Services (1.2%), Tamilnad Mercantile (1.0%), South Indian Bank (1.0%).
Conclusion
Microcap investing, if done after sufficient due diligence, has the potential to generate generational wealth for investors. For those who would like to explore the exciting world of smallcaps and micro cap stocks with huge growth potential, you can learn information driven smallcap/microcap investing atSovrenn.
The learning modules are absolutely FREE. Sovrenn publishes a daily newsletter, that goes by the name Sovrenn Times, where timely and curated updates on interesting developments in the smallcap and microcap space are mentioned.
The platform also covers thematic buckets like smallcap and microcap companies operating in the Railways, Defence, Capital Goods, 5G, Electrification, etc.
Also Read: What is Small and Medium-sized Enterprises (SME) : Definition and Examples
