5 small cap stocks outperform nearly 8% to 11% as Sensex halts seven-day rally

Sensex closed at 59,543.96 lower with 287.70 points or 0.48%. The benchmark opened over 60,000 marks but pulled back due to sell-offs in FMCG, banking and consumer discretionary stocks. Heavyweights such as Reliance Industries, Nestle, HUL, Bajaj twins, HDFC and Kotak Bank further contributed to the downside.

The BSE SmallCap Index was also hit hard by broader bearish markets. The index ended at 28,747.94 lower by 100.48 points or 0.35%. On the index, 5 stocks outperformed, rising from 9% to 17%.

On market performance, Vinod Nair, Head of Research at Geojit Financial Services, said: “The domestic market has slackened its early gains with FMCG and private banks pushing the benchmark. Market attention has shifted to central bank policy announcements since European Central Bank rate hikes at upcoming policy meeting. The impending US GDP data will provide additional clarity on expectations that the Fed will temper its aggression on rate hikes.”

Here is the list of small caps that outperformed the indices on Tuesday:

South Indian Bank:

This Kerala-based bank rose more than 17% during the trading session, clocking a new 52-week high of ₹13.88 each on BSE. However, the stock ended at ₹13.14 each, up 10.79% on the stock market. The market cap of the lender is approximately ₹2,749.86 crore.

Year-to-date, Dalal Street’s share is up nearly 43%.

The reason behind the great buys in South Indian Bank was due to the strong performance in Q2FY23.

During the second quarter of the current fiscal year, the bank made a net profit of 223.10 crore compared to a loss of ₹187.06 crore in Q2FY22. The PAT is also up from ₹ 115.35 crore in Q1FY23. Net interest income (NII) was ₹726.37 crore in Q2FY23 versus ₹527.15 crore in Q2FY22 and ₹603.38 crore in Q1FY23.

In the quarter, asset quality improved with the bank’s gross NPA of 5.67% from 6.65% in Q2FY22 and 5.87% in Q1FY23.

South Indian Bank is a private bank in India that offers clients a wide range of banking services.

NACL Industries:

On BSE, NACL shares rose more than 16% on Tuesday, hitting the day’s high of ₹91.65 apiece. However, the shares ended at ₹86.65 each, up 9.89% on the stock market. It has a market capitalization of approximately ₹1,719.05 crore.

NACL has a presence in PAN India and ranks among the top Indian agrochemical companies. The company has more than 50 products covering all major crops and most geographic areas. It has a strong logistics presence with over 56 stock points across India for faster deliveries.

In Q2FY23, the company recorded a PAT of 30 crore, compared to ₹25 crore in the same quarter last year. EBITDA was ₹58 crore in Q2FY23, higher than ₹47 crore recorded in Q2FY22. Total income for the quarter came in at ₹569 crore, up 27% year-on-year.

Exports contributed 40% of total revenues during the first half of FY 2023. The company is focused on actively working on new product registration and brand building in new geographies.

Pavan Kumar, MD & CEO said: “Now that our Greenfield site in Dahej is operational and plans are underway to expand brownfield capacity in Srikakulam, we are well placed to take advantage of the favorable tailwind for the coming Rabi season, and the outlook for H2 looks positive.”

NACL has announced the first interim dividend of ₹0.30 per share (30% of par) on a par value of Re 1 each fully paid up for fiscal FY23.

Multi Commodity Exchange of India (MCX):

MCX shares hit the 1,500 apiece mark on Tuesday. Shares ended near their daytime high at ₹1,494.45 each, up 9.10% on BSE. All in all, the stock gained 9.5%. The market cap is approximately ₹7,621.45 crore.

MCX also announced its financial performance for Q2FY23, where it posted a whopping 94% growth in net profit to 63.27 crore, from ₹32.66 crore in Q2 of FY22. The net profit margin was 43%. Total income rose 47% yoy to 145.64 crore. While EBITDA climbed 68% yoy to ₹83.84 crore. A total amount of 20,767.5 MT of base metals was delivered during Q2 FY22-23 as compared to 17,691.5 MT in Q2 FY21-22 through the exchange mechanism. For H1 FY22-23, MCX’s market share in the commodity futures market was 96.8%.

Analysts are optimistic about the future of MCX stock. In a report, research analysts at ICICI Securities said: “Our estimates take into account FY23/24 futures ADTV of Rs260/270bn (H1FY22: Rs242 billion) and options ADTV of Rs295/390bn (H1FY22: Rs355 billion, Oct’22: Rs368 billion. we estimate total revenue of Rs4.6 billion/Rs5 in FY23/24.We expect total operating expenses of Rs2.5 billion in FY23, including Rs200 million additional one-time costs for software costs (our estimate) due to the extension of the contract with 63

mane. Our estimate of total operating expenses in FY24 stands at Rs 2.2 billion (including benefit from lower software costs). Accordingly, we estimate the EBITDA margin of 46%/55% respectively in FY23/24.”

The analyst note added: “We expect a core PAT of Rs2.2bn (CAGR of 23% between FY22-24 driven by lower software costs). Maintain BUY with an unchanged target price of Rs1700 (unchanged) based on 35x FY24E core EPS of Rs43.4 and free cash of Rs180 per share.”

MCX is a state-of-the-art commodity derivatives exchange that enables online trading of commodity derivatives transactions, providing a platform for price discovery and risk management.

Ramky Infrastructure:

Ramky Infra concludes contracts for the implementation of government projects throughout the country. The directly developed projects include various BOT/BOOT projects, industrial parks and more.

On Tuesday, Ramky Infra shares hit a new 52-week high of ₹272 each. Overall, the stock gained nearly 11% over the course of the day. However, the stock retreated during the closing hours to finish at ₹267.25 each, up 9.04% on GSE. The market cap is approximately ₹1,849.31 crore.

So far, in 2022, Dalal Street’s share has increased by more than 29%. But in a year’s time the profit of the share is no less than 90% on the stock market. The stock was near the ₹140 level on October 25 last year.

Nureca:

Nureca is a leading healthcare and wellness company with a product range of over 150 SKUs in various categories.

On BSE, small cap stock rose nearly 10% on Tuesday, hitting an intraday high of 818 apiece. However, the stock ended at ₹803.90 each, up 7.8%. The market cap is approximately ₹803.91 crore.

This small-cap stock has corrected significantly in 1 year. The stock was near the ₹1.738 level on October 25 last year. While the share was above 2,000 in the first week of January of this year.

The stock’s 52-week high is 2,175.20 each.

There is an opportunity to buy the share.

Disclaimer: The opinions and recommendations expressed above are those of individual analysts or brokerage firms, not Mint.

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