These 11 smallcap stocks delivered up to 1,700% returns in 2022; do you own any?

At a time when the BSE Smallcap index hardly managed to keep its head above water in the ongoing calendar year, some 11 little-known stocks from the broader universe rallied over 1,000 per cent on a year-to-date basis till December 5.

With a gain of 1,981 per cent, Kaiser Corporation stood as the top gainer in the list. Shares of the company surged to Rs 58.05 on December 5, 2022 from Rs 2.79 on December 31, 2021. It was followed by Hemang Resources (up 1,725 per cent), Alliance Integrated Metaliks (up 1,545 per cent), S&T Corporation (up 1,502 per cent), SEL Manufacturing Company (up 1,404 per cent), KBS India (up 1,258 per cent) and Sonal Adhesives (up 1,223 per cent).

The BSE Smallcap index has gained just 2 per cent on a year-to-date basis till December 5, while the 30-share BSE Sensex added 8 per cent during the same period. Before going ahead, here is a disclaimer that stocks mentioned in the article are for information purpose only.

Speaking on broader markets, Anil Rego, Founder and Fund Manager at Right Horizons, said, “We are still three to four quarters away from small and midcaps (SMIDs) narrowing the valuation discount to its long-term average as SMIDs roughly trading at 25 per cent valuation discount to its long-term average.

Among the other major gainers, Gensol Engineering, RMC Switchgears, IFL Enterprises and Sejal Glass also gained over 1,000 per cent during the same period.

“Large caps will be dominant now but calendar year 2023 could well be the year for SMIDs to dominate its largecap peers as we gain more clarity on interest rate trajectory which will determine the terminal rate for the markets at large,” Rego said.

On the other hand, Aditya Sood, Head of InCred PMS said, “The earnings growth expectation for the small and midcap companies are at 20 per cent CAGR over FY23-25 which is superior to the consensus Nifty earnings expectations of 15 per cent in FY24 and 12 per cent for FY25, respectively. Small and midcap companies would bounce back strongly as the macro environment becomes more conducive.”

Data further highlighted that other smallcap players like Beekay Niryat, Northern Spirits, Ashnisha Industries, Madhusudan Securities, GTV Engineering, Sadhna Broadcast CWD, Supreme Holdings & Hospitality (India), Variman Global Enterprises, Shanti Educational Initiatives, Karnavati Finance and Katare Spinning Mills also advanced between 500 per cent and 1,000 per cent in 2022 till December 5.

Going ahead, Sood thinks that the IT sector can deliver a solid return to investors going ahead. He also prefers companies that are focused on engineering research and design and product companies. “We also like pharma companies that are focused on the manufacturing of API and have proven capability to be either cost leaders and have strong research and development capabilities,” Sood said.

Investors should consult financial advisors before taking positions in a penny or little-known stocks as they are highly risky in nature. Picture this: Some of the stocks, including Raghuvir Synthetics, Birla Tyres, Future Enterprises, Svarnim Trade Udyog, BFL Asset Finvest, Future Lifestyle Fashions, SM Gold and Future Retail, tanked somewhere between 80 per cent and 95 per cent of investors wealth in 2022 till date.

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