Markets have fallen significantly in the last couple of months with select small cap stocks falling faster than the markets. However, in a rising market a best small cap stock tends to give better returns.
Jindal Saw is one of the largest players in the SAW pipe business. It has a significant presence supplying pipes to leading players from the oil and gas industry, including across companies in India and the Middle East like Saudi Arabia, Qatar, Oman and Kuwait. It manufactures a range of pipes including large diameter pipes, ductile pipes and Seamless Tube and Pipes.
For the quarter ending June 30, 2015, Jindal Saw reported a net profit of Rs 104 crores on a capital of Rs 60crores. The EPS for the quarter ending June 30, 2015 was placed at Rs 3.26. One can easily expect an EPS of Rs 12 for FY 2015-16.
This translates into a p/e of just around 5 times at the current market price of Rs 63, making it one of the best small cap stocks at the current levels.
The stock of Kaveri Seed has fallen from Rs 1077 to Rs 426 on the BSE. The stock has fallen sharply on worries over decline cotton acreage, as the company derives its largest revenues from cotton seed. It is the second largest hybrid cotton seed player in the country.
However, the company has been taking a number of steps to address the problem in cotton acreage. It has enhanced the product mix to include growth in maize, millet and paddy. It has expanded its presence in exotic vegetables and culinary herbs for the European markets.
The company has over 600 acres of research farms with varying conditions. For the quarter ending June 30, 2015, the company reported an EPS of Rs 32. For the full year the company is likely to report an EPS of around Rs 45, which discounts the current market price of Rs 422 around 8 times.
It is among the best Indian small cap stocks to buy.
Shares of Karnataka Bank have fallen in line with most banks. The company saw a slight deterioration in its asset quality for the quarter ending June 30, 2015. Karnataka Bank is one of the best small cap stocks to buy for a number of reasons. One is that the RBI might continue to push the repo rate lower. It could benefit a bank like Karnataka Bank.
An impending uptick in the economy would also lead to gains for Karnataka Bank with better credit growth and lower non performing assets.
Karnataka Bank reported an EPS of Rs 5.6 for the quarter ending June 30, 2015. The full year EPS even if we place it on a conservative basis at Rs 22, the stock trades at a p/e of just under 7 times at the current price of Rs 124. The stock is a good small cap share to buy at the current levels.