5 smallcap stocks outperform by rising nearly 8% to 11% when Sensex halts seven days rally

Indian markets snapped their 7-days winning streak with FMCG, banking and consumer durables stocks pressuring the performance on Tuesday. Small-cap indexes too witnessed a selling pressure. However, this was not the case for a list of 5 small-cap stocks that outperformed its broader basket and even Sensex. These stocks gained by 9% to 17% overall in the day's trading session before correcting. Majority of these stocks have announced their Q2 results which fuelled investors optimism in them. Two of the 5 smallcap stocks even touched a new 52-week high. 

Sensex closed at 59,543.96 down by 287.70 points or 0.48%. The benchmark opened over 60,000 mark however pulled back due to selloffs in FMCG, banking and consumer durables stocks. Heavyweights like Reliance Industries, Nestle, HUL, Bajaj twins, HDFC, and Kotak Bank further added to the downside.

BSE SmallCap index as well faced the brunt of broader bearish markets. The index ended at 28,747.94 lower by 100.48 points or 0.35%. On the index, 5 stocks outperformed with a surge of 9% to 17%.

On markets performance, Vinod Nair, Head of Research at Geojit Financial Services said, "The domestic market pared its early gains with FMCG and private banks pressuring the benchmark. Market attention has shifted to central bank policy announcements since the European Central Bank is expected to hike interest rates at its upcoming policy meeting. The impending US GDP data will give additional clarity to the expectation that the Fed will temper its aggression in regard to rate hikes."

Here's the list of small-caps that outperformed the indices on Tuesday:

South Indian Bank:

This Kerala-based bank rose by over 17% during the trading session by clocking a new 52-week high of ₹13.88 apiece on BSE. However, the stock ended at ₹13.14 apiece up by 10.79% on the exchange. The lender's market cap is around ₹2,749.86 crore.

Year-to-date, the stock has soared nearly 43% on Dalal Street.

The reason behind stellar buying in South Indian Bank was due to its strong performance in Q2FY23.

During the second quarter of the current fiscal, the bank garnered 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) stood at ₹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 coming at 5.67% against 6.65% in Q2FY22 and 5.87% in Q1FY23.

South Indian Bank is a private sector bank in India that provides a wide range of banking services to customers.

NACL Industries:

On BSE, NACL shares climbed by over 16% on Tuesday by touching the day's high of ₹91.65 apiece. The shares however ended at ₹86.65 apiece up by 9.89% on the exchange. It has a market cap of around ₹1,719.05 crore.

NACL has a PAN India presence and is among the top Indian Agrochemical companies. The company has over 50 products covering all major crops and most of the geographies. It has a strong logistic presence with over 56 Stock points across India for faster deliveries.

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

Exports contributed 40% of the 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, "With our Greenfield site at Dahej going operational and the ongoing brownfield capacity expansion plans in Srikakulam we are well poised to take advantage of the favourable tailwinds for the upcoming Rabi season, and the outlook for H2 looks positive."

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

Multi Commodity Exchange of India (MCX):

MCX shares touched the ₹1,500 apiece mark on Tuesday. The shares ended near their intraday high at ₹1,494.45 apiece up by 9.10% on BSE. Overall, the stock gained by 9.5%. Its market cap is around ₹7,621.45 crore.

MCX has 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. Net profit margin stood at 43%. Total income surged by 47% yoy to ₹145.64 crore. While EBITDA climbed by 68% yoy to ₹83.84 crore. A total quantity of 20,767.5 MT of base metals has been delivered during Q2 FY22-23 vis-à-vis 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 stood at 96.8%.

Analysts are upbeat on MCX shares going forward. In a report, research analysts at ICICI Securities said, "our estimates factor in FY23/24 futures ADTV of Rs260/270bn (H1FY22: Rs242 billion) and options ADTV of Rs295/390bn (H1FY22: Rs355 billion, Oct’22: Rs368 billion). Accordingly, we estimate total revenue of Rs4.6 billion/Rs5 in FY23/24. We expect total operating expenses of Rs2.5 billion in FY23 which factors Rs200 million additional one-time expense towards software expense (our estimate) due to the extension of contract with 63

Moons. Our total operating expense estimate in FY24 stands at Rs2.2bn (includes advantage of lower software costs). Accordingly, we estimate EBITDA margin of 46%/55% in FY23/24, respectively."

The analysts note added, "We expect core PAT of Rs2.2bn (CAGR of 23% between FY22-24 driven by lower software costs). Maintain BUY with an unchanged target price of Rs1,700 (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 facilitates online trading of commodity derivatives transactions, thereby providing a platform for price discovery and risk management.

Ramky Infrastructure:

Ramky Infra undertakes contracts for the execution of government projects across the country. The Projects directly developed include several BOT/BOOT projects, industrial parks, and more.

On Tuesday, Ramky Infra stocks hit a new 52-week high of ₹272 apiece. Overall, the stock gained by nearly 11% in the day. However, the stock pulled back during the closing hours and ended at ₹267.25 apiece up by 9.04% on BSE. Its market cap is around ₹1,849.31 crore.

So far, in 2022, the stock has soared by over 29% on Dalal Street. But in a year, the stock's gain is whopping over 90% on the exchange. The stock was near ₹140 level on October 25 last year.

Nureca:

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

On BSE, the small-cap stock advanced nearly 10% on Tuesday by hitting an intraday high of ₹818 apiece. However, the stock ended at ₹803.90 apiece up by 7.8%. Its market cap is around ₹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 stock was above the ₹2,000 mark in the first week of January this year.

The stock's 52-week high is ₹2,175.20 apiece.

There is a potential for buying in the stock.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.