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    ​These 5 smallcaps fell up to 65% so far in 2022 but have good fundamentals

    By
    , ETMarkets.com|
    1/6

    Stocks with double-digit profit growth

    Markets have witnessed a good pullback rally in recent times. So far in 2022, the benchmark index, Sensex, has gained about 2.5 per cent while BSE small cap index is down 2 per cent, and during the same period, many small-cap stocks saw sharp corrections. ET Markets analyses stocks that have corrected their valuations – price performance – but their fundamentals – profit growth and margins – are consistent. To filter the list, we considered small-cap companies which were able to maintain profit growth of over 10 per cent in the last four quarters on a year-on-year basis, with about double-digit net profit margin.

    We found 5 small-cap stocks that met the above fundamental criteria and their share prices corrected over 25 per cent in 2022 (Data source: ACE Equity). Take a look atthe key strong points of the stocks on SWOT analysis, according to Trendlyne.com.

    iStock
    ​Brightcom Group | Stock price performance in 2022: -65.75%​
    2/6

    ​Brightcom Group | Stock price performance in 2022: -65.75%​

    High revenue and profit growth with high return on capital Deployed (ROCE) and low PE ratio
    Growth in net profit with increasing profit margin (QoQ)
    Growth in quarterly net profit with increasing profit margin (YoY)
    Company with no debt
    Annual net profits improving for last 2 years
    FIIs / FPIs or institutions increasing their shareholding

    Agencies
    ​Indian Metals & Ferro Alloys | Stock price performance in 2022 : -43.68%​
    3/6

    ​Indian Metals & Ferro Alloys | Stock price performance in 2022 : -43.68%​

    Effectively using its capital to generate profit – RoCE improving in last 2 years
    Effectively using shareholders’ fund – Return on equity (ROE) improving for last 2 year
    Efficient in managing assets to generate profits – ROA improving for last 2 years
    Company with low debt
    Annual net profits improving for last 2 years
    Company with zero promoter pledge
    FIIs / FPIs or institutions increasing their shareholding

    Analyst: Nandish Shah, Senior Derivative & Technical Analyst, HDFC securities

    iStock
    ​Coforge | Stock price performance in 2022: -34.20%​
    4/6

    ​Coforge | Stock price performance in 2022: -34.20%​

    Company with low debt
    Increasing revenue every quarter for the past 4 quarters
    Strong cash generating ability from core business – improving cash flow from operations for last 2 years
    Annual net profits improving for last 2 years
    Book value per share improving for last 2 years
    Company with zero promoter pledge

    Agencies
    ​Acrysil | Stock price performance in 2022 : -33.05%
    5/6

    ​Acrysil | Stock price performance in 2022 : -33.05%

    Effectively using shareholders’ fund – return on equity (ROE) improving for last 2 years
    Efficient in managing assets to generate profits – ROA improving for last 2 years
    Increasing revenue every quarter for the past 4 quarters
    Annual net profits improving for last 2 years
    Book value per share improving for last 2 years
    Company with zero promoter pledge

    Agencies
    Saregama India | Stock price performance in 2022: -28.27%
    6/6

    Saregama India | Stock price performance in 2022: -28.27%

    Company with no debt
    Company able to generate net cash – improving net cash flow for last 2 years
    Annual net profits improving for last 2 years
    Company with zero promoter pledge
    FIIs / FPIs or institutions increasing their shareholding

    Note: To check strong fundamentals, several measures also need to be added before picking the stocks. For this analysis, we have used profit growth and profit margin.
    (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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