Undiscovered Gems in India 3 Small Cap Stocks with Big Potential

The Indian market was flat last week but is up 42% over the past year, and earnings forecasts predict a 17% annual increase. In this dynamic environment, identifying small-cap stocks with big potential can reveal hidden growth opportunities.

10 Undiscovered Gems With Strong Foundations In India

Click here to see the full list of 471 stocks from our India undiscovered gems with strong fundamentals scanner.

Below are some of our favorites from our exclusive roundup.

Simply Wall St Value Rating: ★★★★★★

Review: Action Construction Equipment Limited is engaged in the manufacturing and sale of material handling equipment and construction equipment, primarily in India, and has a market capitalization of ₹157.85 billion.

Operations: Action Construction Equipment Limited generates revenues primarily from the Material Handling and Construction Equipment segments, with additional revenue from Agricultural Machinery at ₹2.05 billion. Segment adjustments contribute to overall revenues of ₹27.92 million.

Action Construction Equipment (ACE) revenues grew by 76.2% in the last year, significantly outperforming the machinery industry’s 25.1%. The company’s debt-to-equity ratio improved from 18.5% to 0.4% in five years and EBIT covers interest payments by 14.4 times, indicating a healthy financial health. Recent highlights include Q1 net income of INR 841.8 million and a significant order from the Ministry of Defence for special forklifts and cranes, showing strong demand and strategic growth initiatives in line with national programmes such as Make in India.

Simply Wall St Value Rating: ★★★★★★

Review: LT Foods Limited is engaged in the milling, processing and marketing of branded and unbranded basmati rice and rice based food products in India and has a market capitalization of ₹148.12 billion.

Operations: The primary source of revenue for LT Foods Limited is the production and storage of rice, generating ₹81.21 billion. The company’s net profit margin is %.

The story continues

LT Foods’ revenues have grown by 35.7% in the last year, outpacing the food industry’s growth of 16.3%. The company’s debt-to-equity ratio has impressively come down from 116.4% to 26.8% in five years, while its interest payments are well covered by EBIT at 10.8x. With a price-to-earnings ratio of 24.2x, below the Indian market average of 34.3x, LT Foods seems to be trading at a good value compared to its peers and industry standards.

Simply Wall St Value Rating: ★★★★★☆

Review: Maharashtra Scooters Ltd. is engaged in the manufacturing and sale of die casting dies, jigs, tooling and die casting components, primarily for the two- and three-wheeler industry in India. It has a market capitalization of Rs 137.76 billion.

Operations: Maharashtra Scooters Ltd. generates revenues primarily from investment (₹2.14 billion) and manufacturing (₹108.10 million). The company operates in the two- and three-wheeler industry in India, with a focus on die-casting dies, jigs, tooling and components.

Maharashtra Scooters, a debt-free entity for the past five years, has shown a steady profit growth of 19.3% per annum during the period. While it has lagged behind the equity market industry’s growth of 63.6% last year, it has maintained high-quality earnings and positive free cash flow. The company recently declared an interim dividend of INR 110 per share and reported Q1 revenue of INR 85.7 million, while net income rose to INR 82.6 million from INR 4.8 million a year earlier.

Key conclusions

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This Simply Wall St article is for general information purposes only. Our commentary is based solely on historical data and analyst forecasts, and is based on an objective methodology. Our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or your financial situation. Our goal is to provide you with long-term, focused analysis based on fundamental data. Please note that our analysis may not reflect the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

This article covers the companies: NSEI:ACE, NSEI:LTFOODS and NSEI:MAHSCOOTER.

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