Top 10 Microcap Stocks in India: List of Best Microcap Shares for 2024

Microcap stocks are publicly traded companies with low market capitalisation, typically between Rs. 100 cr. and Rs. 500 cr. While these companies might not be well-known, they provide unique investment opportunities for those looking to diversify their portfolios with lesser known and potential multibagger opportunities. This article will delve into some of the best microcap stocks based on their net profit margin, and also explore how to invest in them!

Top Microcap Stocks in India for 2024

Here are the top microcap stocks sorted according to their net profit margin, and includes their market caps and microcap share prices:

Microcap Stocks	Sector	Market Cap (in Cr)	Share Price	PE Ratio	Net Profit Margin
Naga Dhunseri Group Ltd	Investment Banking & Brokerage	₹347.56	₹3,333.00	10.27	85.37
Royal Cushion Vinyl Products Ltd	-	₹153.05	₹39.74	0.52	82.76
Athena Global Technologies Ltd	IT Services & Consulting	₹151.07	₹112.89	0.74	81.93
Biogen Pharmachem Industries Ltd	-	₹114.86	₹1.59	59.51	81.09
Som Datt Finance Corporation Ltd	Diversified Financials	₹127.25	₹129.80	10.53	80.44
Bombay Oxygen Investments Ltd	Conglomerates	₹443.93	₹29,315.00	7.71	79.76
Everlon Financials Ltd	-	₹111.23	₹175.85	13.89	78.30
Sera Investments & Finance India Ltd	-	₹130.59	₹20.49	7.31	78.14
Dhruva Capital Services Ltd	Specialized Finance	₹150.32	₹370.00	35.37	76.99
Quest Capital Markets Ltd	-	₹387.80	₹383.00	19.24	75.73

Disclaimer: Please note that the above list is for educational purposes only, and is not recommendatory. Please do your own research or consult your financial advisor before investing.

• Market Cap: Set the lower limit to 100 and the upper limit to 500
• Net Profit Margin: Set to High – Sort from highest to lowest

Note: The data on the microcap stocks list is from 8th July 2024. This data is derived from Tickertape Stock Screener.
🚀 Pro Tip: You can use Tickertape’s Stock Screener to research and evaluate stocks with over 200+ filters and parameters.

Overview of the Top Microcap Stocks in India

Here is a brief overview of the top microcap stocks in our list:

Naga Dhunseri Group Ltd

Naga Dhunseri Group Ltd. is a non-banking finance company in India. It invests in shares, debentures, bonds, and securities. It also holds, develops, and maintains land and buildings. Over the last 5 years, the company’s revenue has grown at a yearly rate of 27.51%, higher than the industry average of 11.08%, and its market share increased from 0.03% to 0.06%. 

Royal Cushion Vinyl Products Ltd

Royal Cushion Vinyl Products Limited, promoted by the Shah and Motasha families, operates a factory in Baska (Halol), Gujarat. The company manufactures and markets PVC Vinyl Floorings, used in households, offices, shops, health clubs, hotels, schools, railways, and buses. Over the last 5 years, the company’s revenue has grown at a yearly rate of 30%, higher than the industry average of 9.87%, and its market share increased from 0.57% to 1.55%. 

Athena Global Technologies Ltd

Athena Global Technologies Ltd, previously VJIL Consulting Ltd, began as a partnership in June 1991 and became a limited company on 6th May 1992. It focuses on software development, providing services, turnkey projects, and products for the domestic market. Additionally, the company engages in consulting and real estate activities. Over the last 5 years, the company’s revenue has grown at a yearly rate of 73.25%, higher than the industry average of 11.54%, and its market share increased from 0% to 0.03%. 

Biogen Pharmachem Industries Ltd

Biogen Pharmachem Industries Ltd started as Wellworth Overseas Limited in July 1995. In August 2011, it became Sun Techno Overseas Limited. On 24th March 2021, the name changed to Biogen Pharmachem Industries Ltd. The company trades in commodities, including agro based, precious metals, and other goods. Over the last 5 years, the company’s revenue has grown at a yearly rate of 20.16%, higher than the industry average of 12.59%, and its market share has remained constant. 

Som Datt Finance Corporation Ltd

Som Datt Finance Corporation Limited, established in October 1993, focuses on proprietary investment in stocks and securities. The company has since diversified into project consultancy, loan syndication, bill discounting, financial advisory services, and both motion and general insurance. Over the last 5 years, the company’s revenue has grown at a yearly rate of 90.44%, higher than the industry average of 11.33%, and its market share increased from 0% to 0.01%. 

Bombay Oxygen Investments Ltd

Bombay Oxygen Investment Limited, previously known as Bombay Oxygen Corporation, was founded in October 1960 to produce and sell industrial gases. On 3rd October 2018, the company changed its name to Bombay Oxygen Investment Limited. It is registered as a Non-Banking Financial Company (NBFC) with the Reserve Bank of India. Over the last 5 years, the company’s current ratio has been 885.49, higher than the industry average of 153.66, and its revenue has grown at a yearly rate of 44.64%, also higher than the industry average of 2.17%.

Everlon Financials Ltd

Everlon Financials Limited, initially incorporated as Everlon Synthetics Limited on 26th July 1989, changed its name on 22nd September 2021. Now registered with the Reserve Bank of India as a Non-Banking Finance Company, Everlon Financials Limited offers financial services, trades, and invests in the securities market. The microcap company has a market capitalisation of Rs.109 cr., and its return on equity (ROE) is 14.48%. 

Sera Investments & Finance India Ltd

Sera Investments & Finance India Limited, formerly known as Kapashi Commercial Limited, was incorporated in 1985. It was promoted by a team of experienced industrialists specialising in the design, manufacturing, and engineering of iron and steel. The company changed its name to Sera Investments & Finance India Limited on 30th April 2022. Over the last 5 years, the company’s revenue has grown at a yearly rate of 111.53%, higher than the industry average of 12.59%.

Dhruva Capital Services Ltd

Dhruva Capital Services Limited, established in 1995 in Udaipur, operates in investment and financing. Registered with the Reserve Bank of India as an NBFC, its primary activities are in and around Udaipur. The company provides hire purchase and leasing services, along with ICDs, loans, and advances. Over the last 5 years, the company’s revenue has grown at a yearly rate of 111.53%, higher than the industry average of 12.59%, and its market share increased from 0% to 0.01%. 

Quest Capital Markets Ltd

Quest Capital Markets Ltd, previously BNK Capital Markets Limited, was incorporated on 17th April 1986. The company trades securities, leases assets, and mobilises fixed deposit schemes for other companies. It invests in securities both short-term and long-term. Quest Capital also provides investment banking services, including loan syndication, bill discounting syndication, and lease consultancy. Over the last 5 years, the company’s debt to equity ratio has been 0.03, lower than the industry average of 156.1, and its current ratio has been 4,271.98, higher than the industry average of 126.01.

How to Invest in Microcap Stocks in India?

Here is how investors in India can invest in microcap shares in India:

1. Open a Demat/Trading/Brokerage account. This can be done through smallcase!

2. Research the top microcap stocks based on various fundamentals suited to your investment objectives. Investors can use stocks screeners like the Tickertape Stocks Screener to do this, utilising the 200+ filters available. 

3. Place a ‘Buy Order’ for the microcap stocks of your choice, suited to your risk appetite and investment objective. 

4. Monitor your microcap investments thoroughly after investing. These stocks can be volatile and require thorough monitoring.

Confused About Which Microcap Stocks to Pick? Consider Exploring these Microcap smallcases

A smallcase is a basket or portfolio of stocks and/or ETFs that represents a specific theme, strategy, or objective. smallcase offers a convenient, hassle-free way to invest in a diversified portfolio. It is created and managed by SEBI-registered investment professionals (also known as smallcase managers). Here are a few microcap smallcases based on particular themes:

1. Quantace Microcap(Monthly Picks) smallcase: This smallcase, managed by Quantace Research, is a portfolio of NIFTY Microcap 250 stocks, the microcap stock index, with a recommended minimum investment of 5-25 Lakhs. 

Quantace Microcap(Monthly Picks) smallcase by Quantace Research

2. Quantace Tiny Titans smallcase: This smallcase, managed by Quantace Research, is a treasure basket of 5-20 stocks selected from NIFTY Microcap 250 Universe. 

Quantace Tiny Titans smallcase by Quantace Research

Disclosures for the aforementioned smallcases.

What are Microcap Stocks?

Microcap stocks represent companies with a market capitalisation between Rs. 100 cr. and Rs. 500 cr. Due to their low market cap and lower liquidity, they carry higher risks and volatility. 

These companies may not be well-known and information about them can be limited. Microcap stocks are often confused with penny stocks, which also have low values. However, they are not the same. 

How do Microcap Stocks Work?

Here is how a microcap stock works:

• Lower market cap: Micrcap stocks typically have a lower market capitalisation, between Rs. 100 cr. and Rs. 500 cr. They are high-risk and potentially volatile stocks, which usually have lower liquidity.
• Lesser-Known Companies: Microcap companies are usually new/lesser known. These smaller companies span across a variety of different sectors and have the potential to become multibaggers. 
• Potential Multibaggers: Some microcap stocks, like Ceenik Exports (India) Ltd, have exhibited a 1-year return of 7397.93! Another microcap company, Jhandewalas Food Ltd, has returned 1701.31 in 1 year. These lesser-known companies with lower market caps have the potential to become multibaggers. However, it is essential for investors to conduct thorough research and consult a financial advisor before investing. 

Features of Microcap Stocks in India

Here are a few key features of microcap stocks in India:

• Potential for High Growth: Microcap stocks, unlike large-cap and blue-chip stocks, offer significant growth potential due to their small size and early-stage development. These companies often have innovative products, disruptive technologies, or unique business models that can create substantial value for investors. Investing in microcap stocks with huge growth potential at the right time can lead to significant returns. Investing in these stocks can result in hefty gains if the company performs well. However, the speculative nature of these investments means that profits and revenues can fall significantly, potentially eroding your wealth by 80-90%. Unlike large mid-cap companies, microcaps often lack the resilience to recover from downturns.
• Highly Volatile: Microcap stocks are highly volatile, with prices that can fluctuate dramatically in a short period. This volatility arises from limited liquidity, a smaller investor base, and susceptibility to market sentiment. While this can lead to quick gains, it also poses the risk of significant losses if not approached with caution.
• Limited Attention from Market Analysts: Even the good microcap stocks often receive limited attention from market analysts, leading to market inefficiencies and fewer eyes on these stocks. However, investors skilled in independent research can identify undervalued opportunities and gain an information advantage.

How to Choose the Best Microcap Stocks to Invest in?

Here are key steps to identify potential multibaggers in the microcap sector:

• Economic Moat: In investing, an economic moat refers to a business’s ability to maintain a competitive advantage, ensuring sustained profits and market share. A wider moat signifies a stronger business. Factors contributing to a moat include cost advantages, brands, exclusive licensing or patents, network effects, and higher switching costs. However, these factors alone do not guarantee high returns; a true moat withstands the test of time. Thus, before investing in Indian microcap stocks, investors must conduct thorough research and consult a financial advisor. 
• Management Quality: Investing in a stock means becoming a business partner. Unlike large caps that often run on autopilot, microcaps are heavily influenced by management decisions. Assessing management goes beyond short-term financial metrics; it requires a deep understanding of their strategic vision and operational competence.
• Promoter Stake and Debt: Promoter stake and debt levels are crucial considerations. A high promoter stake indicates confidence in the business. Conversely, high debt levels can strain cash flow and increase bankruptcy risks during economic downturns. Companies with low debt-to-equity ratios are better equipped to weather financial uncertainties and capitalize on growth opportunities.
• Margin of Safety: The margin of safety is crucial for prudent investing. It represents the difference between anticipated profitability and the break-even point. A higher margin of safety provides protection against market volatility and operational risks. Always ensure to purchase stocks at a reasonable discount to their intrinsic value to mitigate investment risks.
• SWOT Analysis: Conducting a SWOT analysis—assessing a company’s Strengths, Weaknesses, Opportunities, and Threats—is essential for making informed investment decisions. It helps identify critical factors that can impact a company’s performance and competitive positioning in the market. A comprehensive SWOT analysis provides valuable insights into a company’s strategic direction and market competitiveness.
• Time Frame: Microcaps are inherently more volatile than large caps, resulting in significant price fluctuations. Investors should establish a clear investment horizon based on their financial goals and risk tolerance. While short-term market swings are common, focusing on long-term fundamentals—such as business growth prospects, management quality, and valuation metrics—can lead to sustainable returns over time.

Benefits of Investing in Microcap Stocks in India

Investing in microcap stocks offers several distinct advantages for investors looking to enhance their portfolio:

• High Growth Potential: Microcap stocks, with their smaller market capitalisation, can experience rapid growth, especially when operating in burgeoning industries or with disruptive business models. This growth potential can translate into significant returns for investors who identify promising opportunities early on.
• Diversification Benefits: Including microcap stocks in your investment strategy can effectively diversify your portfolio. By adding assets that behave differently from larger stocks and other asset classes, investors can reduce overall portfolio risk. This diversification is particularly valuable during periods of market volatility when different types of investments may perform divergently.
• Opportunities in Undervalued Markets: Microcap stocks often go unnoticed by institutional investors and analysts, creating opportunities for individual investors who conduct thorough research. These stocks may be undervalued or underfollowed, presenting opportunities to capitalise on their true potential before broader market recognition drives up prices.

Investors should remain mindful of the risks associated with microcap stocks, such as their inherent volatility and susceptibility to market fluctuations. Diligent research and a long-term investment approach can help mitigate these risks while potentially harnessing the benefits of high growth and portfolio diversification.

Who Should Invest in Microcap Stocks?

Microcap stocks appeal to different types of investors:

• Experienced and Active Investors: Those skilled in financial analysis and research may discover hidden opportunities in microcap stocks. Active investors who enjoy tracking smaller companies often find them intriguing.
• Long-Term Investors: Investors with a patient outlook can benefit from the growth potential of microcap stocks over time. These investments may require tolerance for short-term volatility but can offer significant rewards.
• Risk-Tolerant & Opportunistic Investors: Microcap stocks carry higher risk compared to larger stocks. Investors comfortable with greater risk levels may find them attractive for their potential higher returns. However, assessing personal risk tolerance is crucial before investing in this segment.

These stocks can diversify portfolios but require careful consideration of risk and potential rewards.

Risks of Investing in Microcap Stocks

Microcap stocks pose significant risks for investors:

1. Their small size and limited liquidity makes them highly volatile.
2. These stocks often lack transparency compared to larger firms, making it challenging for investors to make informed decisions. 
3. Moreover, their low trading volume and limited analyst coverage make them susceptible to market manipulation. 
4. Additionally, microcap stocks can be exploited for scams and fraud, underscoring the need for thorough due diligence before investing.

Factors to Consider Before Investing in Microcap Stocks in India

Investing in microcap stocks can present promising growth opportunities, but it also involves distinct considerations that set them apart from smallcap and penny stocks. Understanding these factors is crucial for making informed investment decisions:

• Market Capitalisation: Microcap stocks are defined by their smaller market capitalisation, typically ranging from Rs. 100 cr to 500 cr. This sets them apart from smallcap and penny stocks, impacting their scale, scope, and financial resources. Due to their smaller size, microcap companies may offer higher growth potential but also face greater financial constraints and market risks.
• Liquidity Challenges: One significant challenge with microcap stocks is their lower trading volumes and liquidity compared to larger stocks. Limited institutional interest and a smaller investor base can make it challenging to buy or sell microcap stocks without significantly affecting their market prices. Investors should be cautious about potential liquidity issues, which could impact their ability to execute trades at desired prices.
• Risk and Volatility: Microcap stocks are inherently riskier and more volatile than larger stocks. Their smaller size and early-stage development expose them to greater market fluctuations, shifts in investor sentiment, and company-specific risks. Investors need to be prepared for increased price volatility and the potential for higher losses when investing in microcap stocks.

Understanding these factors is essential for navigating the complexities of microcap stocks. While they can offer opportunities for substantial returns, investors should conduct thorough research, assess their risk tolerance, and carefully consider their investment goals before delving into the microcap stock segment.

To Wrap It Up…

Microcap stocks’ small size and early development stage can lead to high growth but also increased uncertainty. Understanding their features and differences is crucial for investors, who can then make informed decisions. Therefore, we have listed some of the top microcap stocks based on their net profit margin, and also how investors may select microcap stocks suited to their own investment objectives. However, it is better to conduct proper research and consult a financial advisor before making investment decisions. 

Frequently Asked Questions About Microcap Stocks