Undiscovered Gems In India Featuring 3 Promising Small Caps With Strong Fundamentals

The Indian market has climbed 1.1% over the last week and is up 41% over the past 12 months, with earnings expected to grow by 17% per annum in the coming years. In this thriving environment, identifying small-cap stocks with strong fundamentals can provide promising opportunities for investors seeking growth potential.

Top 10 Undiscovered Gems With Strong Fundamentals In India

Name	Debt To Equity	Revenue Growth	Earnings Growth	Health Rating
Shree Digvijay Cement	0.01%	13.97%	16.37%	★★★★★★
All E Technologies	NA	40.78%	31.63%	★★★★★★
Aeroflex Industries	0.04%	14.69%	33.38%	★★★★★★
Pearl Global Industries	72.24%	19.89%	41.91%	★★★★★☆
Indo Amines	82.32%	17.15%	19.98%	★★★★★☆
Om Infra	13.99%	43.36%	27.66%	★★★★★☆
Network People Services Technologies	0.24%	81.82%	86.35%	★★★★★☆
Piccadily Agro Industries	50.57%	13.86%	42.85%	★★★★★☆
Lotus Chocolate	13.51%	28.10%	-6.06%	★★★★★☆
Abans Holdings	91.77%	13.13%	18.72%	★★★★☆☆

Click here to see the full list of 473 stocks from our Indian Undiscovered Gems With Strong Fundamentals screener.

Below we spotlight a couple of our favorites from our exclusive screener.

Action Construction Equipment (NSEI:ACE)

Simply Wall St Value Rating: ★★★★★★

Overview: Action Construction Equipment Limited manufactures and sells material handling and construction equipment primarily in India, with a market cap of ₹160.43 billion.

Operations: ACE generates revenue primarily from its material handling and construction equipment segments, with additional income from agriculture equipment amounting to ₹2.05 billion.

Action Construction Equipment (ACE) has demonstrated impressive financial health, with earnings growing by 76.2% over the past year, significantly outpacing the Machinery industry's 24.8%. The company's debt-to-equity ratio has improved from 18.5% to just 0.4% over five years, indicating strong financial management. Recent news highlights include a substantial order from the Ministry of Defence and an approved final dividend of INR 2 per share for FY2024, showcasing ACE's robust market presence and shareholder value focus.

• Take a closer look at Action Construction Equipment's potential here in our health report.

• Learn about Action Construction Equipment's historical performance.

IIFL Securities (NSEI:IIFLSEC)

Simply Wall St Value Rating: ★★★★☆☆

Overview: IIFL Securities Limited offers capital market services in India's primary and secondary markets, with a market cap of ₹102.22 billion.

Operations: IIFL Securities generates revenue primarily from capital market activities (₹20.25 billion) and insurance broking and ancillary services (₹2.77 billion). Facilities and ancillary services contribute an additional ₹375.25 million to the revenue stream.

IIFL Securities, a notable entity in the Indian capital markets, has shown impressive earnings growth of 120.4% over the past year, outpacing the industry average of 63.2%. With a price-to-earnings ratio of 16.5x, it stands attractively valued against the broader market's 34.4x. The company’s net debt to equity ratio is at a satisfactory level of 35.5%, having reduced from 117.6% five years ago to its current position of 67.2%. Recent regulatory actions led to a penalty by SEBI for technical errors in client data mapping but did not significantly impact overall performance as evidenced by strong Q1 results with revenue climbing to INR 6,438 million and net income reaching INR 1,821 million compared to last year’s figures.

• Click to explore a detailed breakdown of our findings in IIFL Securities' health report.

• Examine IIFL Securities' past performance report to understand how it has performed in the past.

Maharashtra Scooters (NSEI:MAHSCOOTER)

Simply Wall St Value Rating: ★★★★★☆

Overview: Maharashtra Scooters Ltd. manufactures and sells pressure die casting dies, jigs, fixtures, and die casting components primarily for the two and three-wheeler industry in India with a market cap of ₹135.61 billion.

Operations: Maharashtra Scooters Ltd. generates revenue primarily through investments (₹2.14 billion) and manufacturing activities (₹108.10 million), with a minor segment adjustment of ₹15.50 million.

Earnings for Maharashtra Scooters have grown 19.3% annually over the past five years, showcasing high-quality earnings. The company is debt-free, eliminating concerns about interest payments and has remained so for the last five years. Recently, Maharashtra Scooters approved an interim dividend of ₹110 per share and reported a significant increase in net income to ₹82.6 million from ₹4.8 million year-over-year, with basic earnings per share rising to ₹7.2 from ₹0.4

• Dive into the specifics of Maharashtra Scooters here with our thorough health report.

• Review our historical performance report to gain insights into Maharashtra Scooters''s past performance.

Make It Happen

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Interested In Other Possibilities?

• Explore high-performing small cap companies that haven't yet garnered significant analyst attention.
• Fuel your portfolio with companies showing strong growth potential, backed by optimistic outlooks both from analysts and management.
• Find companies with promising cash flow potential yet trading below their fair value.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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