2 Small Cap Stocks That Turned Multibagger On A YTD Basis

Identifying a potential multibaggger is never easy, nevertheless there are some common aspects of these:

Common aspects of Multibagger stocks

 

1. These are most commonly small or micro-cap stocks with m-cap below Rs. 1000 crore.

2. Typically they are illiquid stocks. Not tracked by brokerages and there is negligible institutional interest in them.

3. Zero debt or debt to equity ratio is less than 0.5.

4. High ROE and RoCE.

5. Chances of P/E being low are also high

6. Management of the potential multibagger is sound and ethical. Also, though there is no metric to study it but high RoE is itself an indication of an efficient management.

7. Scalable business line: Say for instance pharma businesses

8. Sector leader also offers an opportunity to turn into a multibagger scrip.

9. The company should be seen to have future growth potential.

Likewise, here we will discuss 2 such stocks that are not on brokerages' radar but have doubled investors' money in just 7 odd months or say on a YTD basis.

 

Vadilal Industries

The company well known as an ice-cream brand has on a YTD basis yielded 126% return. The scrip last quoting at Rs. 2056.75 at the start of the new year was priced at just Rs. 980.9 per share as on January 3, 2022.

The company's financials are improving substantially with net income as for Fy22 placed at Rs. 44.71 crore as against Rs. 4.62 crore in Fy21. Revenue for the year Fy22 also soared to Rs. 706 crore as against Rs. 480.32 crore in Fy21.

This is one of the company's with good Piotroski score. Also, the company commands a reasonable valuation as compared to the sector. The company's debt to equity ratio is at 0.58.

Lately, the company's US subsidiary has signed a stock purchase agreement for subscription of 100% voting rights of Krishna Krupa Corporation, USA (KKC).

The company engaged in the business of manufacturing ice cream and flavored milk, and processing and exporting processed food products, such as canned pulp has presence in more than 45 countries including the countries in North and South America, Europe including the UK, the Middle East, South East Asia, and Australia.

Jyoti Resins and Adhesives

This small cap chemicals stock also soared a good 113% on a YTD basis, doubling investors money in a short span. The company manufactures synthetic resin adhesives. Also it manufactures various types of wood working adhesive.

Again this is a company good financials. The company's revenue and net income as in Fy22 stands at Rs. 185.41 crore and Rs. 19.77 crore, respectively. Over the last 5 years, net income has grown at a yearly rate of 118.17%, vs industry avg of 25.31%.

Though, there is reported a decline in RoE from the last 2 years. From 50.68, the RoE in Fy22 has come down to 31.6%.

Again it is a zero debt company. The company in May declared 75 per cent final dividend for FY2021-22 and 2:1 bonus share issue.

Disclaimer

The story is just collated to list out the small cap multibaggers of the year 2022 so far and it should not be inferred as a recommendation to buy into these scrips.